Pay-as-you-drive or comprehensive car insurance? This is among the most anticipated questions when purchasing a car insurance policy.
While both types of insurance plans offer damage coverage for the insured vehicle, they have some key differences that must be considered when choosing the best policy.
We have designed this blog to compare comprehensive car insurance Vs pay-as-you-drive car insurance. We will also discuss the benefits and purposes of each type of insurance to help you make the right decision.
What is Pay-As-You-Drive Car Insurance?
A pay-as-you-drive car insurance is a type of cover that offers coverage based on the usage of the insured vehicle. In simple words, you pay a car insurance premium based on the distance you have covered.
When purchasing this plan, you need to select the total number of kilometres you are expecting to cover during the policy tenure. At Reliance General, you can select any number of kilometres starting from 2,500 kilometres.
Once you have the policy, you can enjoy the coverage within your selected distance. In this way, you only pay for the distance you have covered.
As a result, a pay-as-you-go policy becomes highly cost-efficient for seasonal drivers or those who drive rarely.
Benefits of Pay-As-You-Drive Car Insurance
It is highly cost-effective as compared to standard car insurance plans.
You can customise your plan based on desired distance and coverage requirements.
You can move forward with your unused kilometres to next year.
It is a great option for individuals who drive their vehicle very little.
What is Comprehensive Car Insurance?
Comprehensive car insurance is a type of
car insurance plan that offers coverage for own damage as well as third-party liabilities. It helps you cover expenses arising from unforeseen situations like road accidents, third-party liabilities, personal injuries, natural calamities, theft, fire, and more.
It also comes with numerous add-ons that can provide additional coverage. These include zero depreciation cover, engine protection cover and roadside assistance cover, among others.
Benefits of Comprehensive Insurance
It offers comprehensive coverage for third-party liabilities as well as own damage.
It comes with a broad list of inclusions and exclusions.
Numerous add-ons are available.
Pay-As-You-Drive Vs Comprehensive Car Insurance
A pay-as-you-drive cover and a comprehensive car insurance policy may look similar at a glance in terms of coverage; they have their own set of differences.
Here is the table showing the key difference between pay-you-go vs comprehensive car insurance:
Parameters |
Pay As You Drive Insurance |
Comprehensive Insurance |
Purpose and USP | The main purpose of a pay-as-you-drive car insurance plan is to allow you to pay based on the usage of your car. It is a highly cost-effective insurance solution, especially for occasional drivers, that requires you to pay only for the kilometres you have covered. | The main purpose of a comprehensive car insurance plan is to provide you with broad coverage. Its main highlight is that it provides financial coverage for self-damage as well as third-party liabilities arising from your insured vehicle. |
Premiums | The premiums for a pay-as-you-drive policy are lower than those of other plans. This is mainly because it doesn’t offer third-party coverage, and you only pay for the distance covered by your vehicle. | Comprehensive car insurance plans usually have very high premiums because they offer coverage for both third-party and personal damage. |
Tenure | The tenure of PAYD insurance is usually a year. You can renew your policy annually. | Comprehensive insurance offers multiple tenure options ranging from one year to five years. |
Scope for Customisation | You can select the number of kilometres you need coverage for. You can also adjust your plan as per your specific requirements. | Comprehensive car insurance plans are also customisable. You can select your tenure and purchase useful add-ons to enjoy dedicated coverage. |
Telematics | With a pay-as-you-go cover, a telematic device is installed in your vehicle to track your number of kilometres. This allows both you and your insurance provider to monitor the distance covered by your vehicle. | A comprehensive plan does not require you to install any device in the insured car. Whether you have crossed countries or kept your vehicle parked in the garage, you will have to pay the fixed premium. |
Claims Process | You can file a claim if your insured vehicle has suffered damage due to accidents, natural hazards, fire, theft, etc. The claim settlement process remains the same as any other type of insurance. | Similar to the pay-as-you-drive cover, you can file a claim for damage caused by accidents, natural calamities, theft, fire, etc. However, it also offers coverage for third parties. This means you don’t have to purchase a separate third-party car insurance policy. |
Third-party Damage | It comes only with own-damage coverage to the insured vehicle. In other words, a PAYD doesn’t offer third-party coverage. | A comprehensive car insurance plan offers third-party coverage alongside coverage for own damage. |
Customised Kilometre Limit | You can select the number of kilometres for which you need coverage. The base limit with our Reliance Limit Sure plan is 2,500 kilometres. You can add your desired distance in multiples of 1,000 beyond the base limit. This structure prevents you from paying for days when your car is parked in the garage. | You can not select the number of kilometres. A comprehensive car insurance plan comes with fixed coverage and premiums. Thus, you must pay for the entire year regardless of whether you have driven your car. |
Who is it for? | Infrequent car users, senior citizens, and multiple car owners. | Recommended for everyone. |
Pay As You Drive Vs Comprehensive Cover: Which is Better?
Both
pay-as-you-drive and comprehensive car insurance are reliable insurance solutions. However, their suitability is based on the type of car drivers and their budget.
A pay-as-you-drive cover can help you save money if you don’t use your vehicle regularly by providing coverage for a pre-decided number of kilometres.
However, if you are a regular car driver and use your vehicle extensively, then
comprehensive car insurance is the right choice for you. It offers a broad coverage and numerous benefits.
Frequently Asked Questions
Is pay-as-you-drive insurance worth buying?
Yes. Pay-as-you-drive car insurance coverage is a great option if you don’t drive your vehicle frequently.
Do I really need comprehensive car insurance?
If you are a daily car user or use your car very extensively, then a comprehensive car insurance plan is a must. Otherwise, you can opt for pay-as-you-drive car insurance.
What is the disadvantage of pay-as-you-go car insurance?
The main disadvantage of the pay-as-you-drive policy is that it doesn’t offer coverage for third-party liabilities. Hence, you need to purchase a third-party policy separately.