Pay As You Drive Insurance
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What is Pay As You Drive Insurance?
Pay as You Drive is a type of car insurance cover that allows the policyholder to reduce the premium of the Own Damage component. The premium depends on the number of kilometres covered by the insured vehicle during the policy period. It is a type of Comprehensive Car Insurance Policy; however, as a policyholder, you will be able to save on the premium depending on the usage of the vehicle during the policy period. In simple words, you can also call it drive less pay less car insurance..
Features of Pay As You Drive Insurance Policy
Here’s a table highlighting the key features of the Pay as You Drive car insurance.
Features | Benefits |
|---|---|
Low Premium | If you use the car occasionally, you will pay a lower premium as compared to a standard Comprehensive Car Insurance Policy, where the premium is not dependent on the car’s usage or distance travelled. |
Customisation | You can customise the insurance policy based on the vehicle’s usage in terms of the estimated distance to be covered by the car. |
Flexibility | If you feel you are about to cross the declared distance travelled, you can top it up with the suitable km range and ensure continuous insurance coverage. |
Tenure | Typically, the tenure of the Pay as You Drive cover stands at one year. |
How Does Pay as You Drive Insurance Work
Pay as You Go insurance works slightly differently compared to the standard Comprehensive car insurance. The following points explain how Pay as You Drive car insurance coverage works.
Declaring Car Usage
You need to declare the number of kilometres the insured car will cover in the policy period. The Pay as You Drive car insurance policy’s premium depends upon the number of kilometres the insured car is driven. While purchasing the plan, you will have to choose a ‘distance to be travelled’ slab. In simple words, you make an informed decision regarding how much distance you will travel in the insured car and pay the corresponding premium.
Provide Odometer Reading
You must provide the odometer reading of the car before the policy expiry to avail of the discount on the Own Damage premium. For instance, if you have declared that the car will be driven for 10,000 km in a year, you must provide proof of it during the policy expiry by disclosing the odometer reading to the insurer. Based on the distance driven, you will get the policy benefit.
Claim Process
If you raise a claim against the policy, the vehicle should be within the declared distance. For instance, if you had opted for 10,000 km, then the car should not exceed that distance limit while raising a claim. If the vehicle is within the specified distance limit, your claim will be settled, similar to the standard Comprehensive policy.
What Happens if the Declared Car Usage Limit is Exhausted?
If your car exceeds the declared usage limit, you need not pay an additional premium, and you will continue to get the policy coverage. However, during the claim settlement, the insurer may ask you to pay an additional amount as a co-payment. Please note that this process may differ from insurer to insure. So, kindly contact your insurance provider for more accurate information.
How To Buy Pay As You Drive Insurance
Here are the steps to purchase a Pay as You Drive Car Insurance Policy online. This is a generic process, the exact purchase journey might differ from one car insurance company to another.
Step 1: Check which insurer is offering such a plan by browsing their website.
Step 2: Read the features, benefits, inclusions, and exclusions of the policy.
Step 3: Enter personal and car details in the relevant purchase section of the website.
Step 4: Declare information and documents as per the insurer’s demands.
Step 5: Select a car insurance package along with suitable add-ons, if needed.
Step 6: Make the payment online.
Step 7: Download the car insurance policy or receive it in your registered email ID’s inbox.
What is covered?
What Is Not Covered?
What Is Covered in Pay As You Drive Insurance?
Here are the inclusions of the Pay as You Go insurance cover.
Damage to the vehicle due to road accidents.
Damage incurred due to natural and man-made calamities such as floods, riots, etc.
Damage due to a fire or an explosion.
Vehicle theft and total loss.
What Is Not Covered in Pay As You Drive Insurance?
Here are the exclusions of the Pay as You Go car insurance.
Damage while driving the car without a valid Driving Licence.
Damage while driving the vehicle under the influence of alcohol or drugs.
Damage due to electrical or mechanical failure.
Depreciation of the vehicle due to regular wear and tear.
Difference Between Pay As You Drive (PAYD) and Comprehensive Car Insurance
Here’s a table highlighting the key differences between the Pay as You Go car insurance and Comprehensive car insurance.
Parameter | Pay as You Drive Cover | Comprehensive Cover |
|---|---|---|
Uniqueness | PAYD’s uniqueness is that it is usage-based. You can choose from different distance-based slabs (for example, below 3,000 km, between 3,000 to 5,000, etc.) and pay the premium based on your car’s usage. | A Comprehensive Cover’s uniqueness lies in the fact that you can buy an annual cover or a long-term cover (for example, a three-year cover) to insure your car against damages for a long time. |
Premium | The payable car insurance premium is primarily based on the distance covered by the car. | The payable premium in this vehicle insurance policy is primarily based on the car’s make and model, age, location, add-ons, and Insured Declared Value (IDV). |
Customisation | The PAYD cover is highly customisable as it allows you to insure your car based on your usage. Unlike the Comprehensive Policy, here, if you use your car less, you pay less premium. | The Comprehensive car cover is customisable based on the IDV and add-ons. Usually, you can customise your motor insurance policy by selecting the IDV from a range and picking suitable add-ons. Your premium will vary accordingly. |
Duration | Typically, the tenure of Pay as You Drive cover stands at one year. However, it may differ from insurer to insurer. | Whether you use your car or not has no impact on the policy’s duration. For example, if you have chosen a one-year policy, the policy’s duration will be one year, irrespective of the car’s usage. |
Claims | You can raise a claim as per the policy’s terms and conditions till the time you have not crossed the selected kilometre barrier. | You can raise a claim as per the policy’s terms and conditions till the time your policy has not expired. |
Telematics | Your insurer might ask you to install a Telematics device in your vehicle to keep track of the kilometres. | Usually, there’s no requirement for a Telematics device in a Comprehensive Car Insurance Policy. |
Existence | It is a relatively new type of car insurance policy in the Indian market. All existing insurance providers might not offer it at this stage. | Such a cover has been in existence for a few decades in the Indian insurance market. It is a popular cover and has sustained over a period. |
Things to Keep in Mind Before Purchasing Pay as You Drive Insurance Cover
Here are a few things that you can consider before buying a Pay as You Drive insurance cover.
Multiple Car Ownership
If you won multiple cars, then purchase the Pay as You Drive cover for the car that is least used, typically less than 10,000 to 15,000 km in a year.
Vehicle Usage
If you use a vehicle less than 10,000 to 15,000 km per year, or you use public transport for daily commuting, or you travel outstation on a regular basis and will rarely use the car, the Pay as You Drive insurance cover is the right plan.
*ACKO currently does not offer PAYD insurance
Frequently Asked Questions about Pay as You Drive Car Insurance
This section covers basic queries regarding PAYD.
What is Pay as You Drive in insurance?
Pay as You Drive refers to an insurance cover for a car whose premium depends on the distance covered by the insured vehicle.
Is Pay as You Drive insurance good?
Pay as You Drive insurance is a good option if you don’t use your car frequently, as the plan’s premium depends on the distance covered by the insured vehicle.
Which insurance company has launched the Pay as You Drive vehicle insurance policy
The Pay as You Go insurance is a new concept in the insurance industry, and most insurers offer this plan. You can research online to find out which insurance companies offer this plan.
What is pay premium as how you drive?
Pay premium as how you drive is a term used for the Pay as You Drive insurance coverage. It means the premium for the cover depends on how much distance you drive during the policy period.
Who launched Pay as You Drive insurance?
Several insurance providers have launched Pay as You Drive insurance for cars. You can go online and research to find out which insurance companies offer this plan.
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