Pay as you drive insurance: Pros and cons

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The administration is discouraging unnecessary travel amidst the pandemic. Many companies have extended work-from-home periods. People who do not use their car often usually consider insurance as a burden. In this context, pay as you drive insurance can be useful for them. Pay as you drive is a kind of comprehensive car insurance plan that charges a premium based on the usage of the car. The policy tenure is one year. It is also cheaper than the regular car insurance policy.

Features

Some of the key features of the pay as you drive insurance policy include:

— It is a part of the sandbox project of insurance regulatory body Irdai.

— The policy tenure is one year.

— The premium is cheaper than a regular car insurance policy.

— Irdai fixes third-party premium.

— The own damage premium depends on the distance covered by the car

Benefits

The pay as you drive policy is particularly beneficial for those who don’t use their cars much. Let’s take a look at the benefits it offers:

i) Affordable:

Premium of pay as you drive policy will depend on how much the vehicle is used. Anyone can choose the lowest slab. The slabs are low, and therefore, the premium amount is also low, and way cheaper than regular car insurance premium.

ii) Free telematics device:

The policyholder gets a free telematics device installed in the car. This device not just monitors the kilometres, but also the condition of the car and the driving habits of the driver.

iii) Flexibility:

The policyholder can customise the cover as per his requirements by choosing add-ons. They can either upgrade to a higher slab or switch to their regular slab as per their need.

iv) Discounts:

Under the pay as you drive insurance, premium discounts are offered by insurance companies on own damage insurance premium.