Are you worried about paying a high premium for your less frequently used car? Well, you might have come across different affordable premium car insurance options. But here are the best of all: pay-as-you-drive insurance and how-you-drive insurance.
So, what is pay-as-you-drive insurance? How does it differ from how-you-drive insurance? In broader terms, these are car insurance coverage options tailored to specific usage, offering cost-effective solutions to car owners.
This initiative was driven by the Insurance Regulatory and Development Authority of India (IRDAI), aiming to encourage insurance providers to offer more accessible and affordable car insurance solutions.
Here is a blog that delves into pay-as-you-drive car insurance and everything you need to know about it.
What is Pay-As-You-Drive Insurance?
Pay-as-you-drive insurance is a flexible option for car insurance that adjusts premiums based on the specific distance your car is expected to be driven within the policy period. It extends financial coverage tailored to your actual usage, offering opportunities to reduce premium rates.
This data-driven approach not only aligns premiums with actual driving and usage patterns but also introduces transparency in car insurance costs.
How is ‘How You Drive Insurance’ different from Pay-As-You-Drive Insurance?
How you drive insurance fixes the policy coverage and the applicable premium based on how you drive your car. You may have to provide options for live tracking to monitor the speed and usage, and the pricing will depend on these aspects.
It will encourage car drivers to be more disciplined while also benefiting from reduced premium rates.
By promoting disciplined driving habits, such as adhering to speed limits and being mindful of traffic signals, you can demonstrate safe driving habits and enjoy great savings on your insurance costs.
How does the Pay-As-You-Drive Policy work?
Let us consider the experience of Mr Ram, who purchased the Reliance General Insurance Limit Sure - Pay-As-You-Drive for his brand new Maruti Alto car, to understand how it works and benefits him during the policy year.
Mr Ram is a retired individual who lives with his wife in Bangalore. Both of them are used to using public transport for their regular commuting across the city and prefer using their car when they go on long-distance travel, especially to attend functions.
He recently purchased a brand new Maruti Alto for his family and wanted to get car insurance with the pay-as-you-drive option as he uses his car less frequently throughout the year.
So, as he approaches Reliance General Insurance, he will have to go through the following steps.
Decide the estimated kilometre limit
Firstly, Mr Ram has to provide the estimated distance, the “Kilometre Limit,” also called “Available Kilometres”, that he will drive in a policy year. It can start at 2,500 km and be increased in multiples of 1000.
Let us assume he has chosen a kilometre limit of 2,500 km.
Based on the kilometre limit chosen, the
own-damage car insurance premium will be determined. The lower the kilometre limit, the lower the premium.
Provide the current odometer reading
Upon choosing the kilometre limit, he has to provide details of his car’s current odometer reading. It is mandatory at the time of buying and renewing the policy.
It will help in identifying if Ram has exceeded or stayed within the kilometre limit.
So, if the odometer reading is 10,000, his car will be insured until it covers 12,500 km.
Raise a claim request
In the event of an unexpected accident during the policy year and within the kilometre limit, Mr Ram can request a claim to cover the damages against his own-damage car insurance policy.
To raise a claim, he must provide the car insurance policy, odometer reading, details of the accident, vehicle registration certificate, driving licence, Police FIR, if applicable and other documents such as proof of identity and address to raise a claim.
What happens if You Exceed the Kilometre Limit in the Pay What You Drive Insurance?
If you exceed the kilometre limit, you can use the Top-Up Limit option to increase the coverage with extra kilometres for the remaining policy period.
On the other hand, if you have unused kilometres, you can benefit from the option to carry it to the following year with the Carry Forward Limit option.
At Reliance General, we offer grace kilometres of up to 125 km to renew your pay-as-you-drive policy before you run out of kilometres and are affected by the loss of coverage.
Benefits of Pay-As-You-Drive Car Insurance
Flexibility to choose the coverage distance
You can decide on the distance for which you need the car insurance coverage. As discussed in the example above, if you use your car less frequently or use public transport more frequently, you can consider car insurance with a pay-for-what-you-drive option.
Save on premiums
You can benefit from a discount on the premium for your own-damage car insurance if you choose a lesser kilometre limit and reduce your premium for the next year if you have unused kilometres in the current year.
It is a cheap pay-as-you-go car insurance featuring tailored advantages and transparency.
Manage kilometre limits
When you are not sure about the kilometre range or happen to travel more than the estimated distance unexpectedly, you can increase the kilometre range based on your requirements with the Top-Up limit.
Wrapping Up
Pay-as-you-drive car insurance is a flexible and cost-effective car insurance option that aligns the premium rate based on actual usage.
Reliance General offers the Limit Sure -
Pay-As-You-Drive option. With features like top-up options for increasing the limit and carry-forward options for utilising unused kilometres, our pay-as-you-drive insurance ensures continuous coverage for your car.
The growing popularity of the pay-as-you-drive option can make
car insurance more affordable and accessible for different categories of car owners.
Frequently Asked Questions
When can I raise a claim on my pay-as-you-drive car insurance?
You can initiate a claim after any applicable and unprecedented event that has damaged your car, just like any other car insurance claim. However, in pay-as-you-drive insurance, you need to ensure that your car insurance policy is active and your vehicle hasn’t crossed the kilometre limit.
Who should opt for pay-as-you-drive insurance?
If you use your car less frequently, have multiple cars or station your vehicle elsewhere and drive it seasonally, you can consider buying a pay-as-you-drive car insurance policy.
How can I buy a pay-as-you-drive car insurance?
You can buy pay-as-you-drive car insurance with Reliance General by selecting it as your preferred type of coverage when purchasing car insurance.