Over the past few weeks, a handful of insurance companies have started offering pay-as-you-drive insurance. For drivers who aren’t constantly on the road, these plans could offer an opportunity to reduce car insurance costs.
By Sajja Praveen Chowdary
Since most companies have adopted work-from-home policy due to the ongoing Covid-19 pandemic, there has been a drastic nationwide reduction in the number of kilometres we drive. From mid-March through June first week, the total number of kilometres driven is down by almost 50% countrywide, according to recent media reports. These are some truly strange times as extraordinary changes have become common in pretty much all aspects of our live
Employees throughout the country are being encouraged to work from home, most of the shopping is happening online, and many other things the way we used to do earlier are changing too. With evolution taking place everywhere, why should insurance be left out?
On that note, we now finally have usage based motor insurance policies in India. The new type of car insurance policies, launched by different insurers, allows car owners to insure their vehicles for kilometres they tend to drive instead of the run of the mill full year. For all those looking for a car insurance policy that’s priced based on how much you actually drive, pay-as-you-use insurance may be the answer.
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Over the past few weeks, a handful of insurance companies have started offering pay-as-you-drive insurance. For drivers who aren’t constantly on the road, these plans could offer an opportunity to reduce car insurance costs.
Edelweiss SWITCH
Edelweiss General Insurance’s Edelweiss SWITCH is driver-based motor insurance policy that not only allows vehicle owners to switch their motor insurance ‘on’ and ‘off’ based on usage, but also covers multiple vehicles under a single policy as it is a floater policy. Unlike a traditional motor own damage policy, insurance premium for SWITCH will be calculated on the basis of age and experience of the driver.
Bharti AXA Pay-as-you-drive
Bharti AXA General Insurance will now offer usage-based motor insurance policies for private car owners under Irdai’s Sandbox project. The Pay-as-you-drive insurance product will be a combination of both comprehensive own damage (OD) and third party (TP) policy wherein the TP premium will be decided as per the Irdai norms while the comprehensive OD premium will be calculated basis how many kilometres you intend to drive your car in a given time period. Currently, the insurer has come up with three slabs—2,500 km, 5,000 km and 7,500 km under the Pay-as-you drive motor insurance policy.
Take note
With the introduction of Pay-as-you-use, motor insurance will evolve to become much more responsive to the needs of the customers. The shift makes sense in uncertain times when unnecessary journeys are discouraged by the government and organisations and employees alike are discovering the benefits of working from home.
Someone who doesn’t drive much might save money by switching to Pay-as-you-use car insurance.
However, when considering how much you drive, don’t mistakenly factor in the length of time your commute takes, especially if you spend time sitting in congested traffic. It is not about how long you spend in your car. It is the distance you are driving. The ‘Pay-as-you-drive’ model will undoubtedly enhance insurance penetration in the overall sector by bringing more and more vehicles under the insurance umbrella.
