Insurance Regulatory and Development Authority of India (IRDAI), India’s Insurance Regulator announced the permit for the Pay As You Drive insurance in India on the 7th of July 2022. This insurance has been a common concept in foreign countries but has been introduced in India for the first time. What is this insurance, what are its features, and how can an individual benefit from this new change. So, let’s discuss this insurance in this article in detail.
Pay As You Drive Insurance:
- Pay As You Drive Insurance is approved by the Insurance Regulator of India, Insurance Regulatory and Development Authority of India on July 7, 2022.
- The insurance will be known as Sophisticated Add-Ons to Motor-Own Damage Policy.
- IRDAI permitted the general insurance companies the cover damage for tech-enabled motor-own damage. This means an individual has to pay the premium depending upon the usage of the vehicle.
- The cover also includes Pay How You Drive insurance where the premium will be dependent on how you drive the vehicle. Here, an individual will pay more premium amount if he/she is rash-driving, over-speeding, or any other such incidence.
- There is another policy named Floater Policy for the vehicles belonging to the same individual owner for two-wheelers and private cars.
- Customization: There will be a premium slab for the vehicle based on as you drive and how you drive with Add-Ons options.
- Flexible: It depends on the individual to pay for the lesser/higher slab.
- Low Premium
- Telematics Device: A device that records readings of the vehicle
What is different from Traditional Insurance:
Pay As You Drive is unique from traditional vehicle insurance policies in the following manner:
- In the Pay, As You Drive Insurance Policy an individual needs to pay based on the usage of the vehicle, while a traditional motor insurance policy does not account for that.
- The new policy allows customization in the insurance policy whereas the traditional policy does not allow the same.
- Pay As You Drive Insurance uses telematics devices to take readings of the vehicle, while traditional motor insurance policies do not use such practices.
Benefits for Individuals:
- Societal Benefits: Individuals becoming socially responsible for driving their vehicles wisely and safely.
- Commercial Benefit: Since high insurance premiums will be charged in the case of rash driving, over-speeding, and another case, an individual might not adopt such practices and can save higher/extra premiums.
- Cost-Saving: As the premium will be paid on the usage of the vehicle, there is the possibility of less premium charged to the vehicle owner.
- New Choice: It provides individuals to pay a premium as per usage which is quite different from traditional insurance policies.
- Safer Roads: Since telematics devices will be installed in the vehicle, it will enable the driver to drive safely, which will eventually end up in safer roads as well.
- Personal and Vehicle Security
Drawbacks of Pay As You Drive:
Privacy Concerns: Since the Telematic Device will be installed in the vehicle, there is the possibility of leak of private information like living patterns, and others.
What Should Individuals Do?
The Pay As You Drive Insurance is a new concept and has recently got approval. The laying down of rules and regulations of the policy will take some time, but its arrival is here. This insurance policy looks good for individuals who travel less and have a safer approach to driving a vehicle. There are more clarifications awaited regarding this policy and hence should go thoroughly before opting for this insurance.