Save on Insurance with ‘Pay As You Drive’: Pay Premium Based on Kilometers Driven – Learn About the Plan

Large Number of People in India Adopt ‘Pay-As-You-Drive’ Vehicle Insurance

In this insurance model, the premium is determined based on how much your vehicle is driven within a year. ‘Pay-As-You-Drive’ can be advantageous for those who use their vehicle less frequently. However, it may not be beneficial for those who drive more than 10,000 kilometers annually.

Who Benefits from It?

This type of insurance is particularly beneficial for college students, senior citizens, individuals who frequently use public transportation, or those who own multiple vehicles and use them occasionally. It also includes hybrid employees and people in small towns who travel short distances. According to a study, 35% of those who have opted for this insurance work in hybrid models, meaning they only work from the office 2 or 3 days a week.

Premium Calculation

In ‘Pay-As-You-Drive’ insurance, there are three pre-defined slabs: 2,500 km, 5,000 km, and 7,500 km. When purchasing coverage, you must choose one of these slabs. The premium is then calculated based on the selected slab, along with the car’s make, model, and the driver’s profile.

How Much Can You Save?

For example, if the total premium for regular insurance is ₹10,000, selecting the 2,500 km slab might reduce the premium to approximately ₹4,500, the 5,000 km slab to ₹3,500, and the 7,500 km slab to ₹2,500. You could save up to ₹2,000 on the 10,000 km slab.

Top-Up If You Exceed the Limit

If you exceed the predetermined kilometers, the insurance company may offer a grace period with a few additional kilometers. If you exceed this as well, you will need to top up. Otherwise, if you get into an accident, your claim may not be considered. Only if you have already topped up will your claim be valid.

Telematics Device Installation

Insurance companies install a telematics device to track the car’s running, but they do not charge customers for this. Before the coverage period ends, the customer must send a photograph of the odometer showing the kilometers driven to the company.