The higher the slab you choose to drive, the higher the premium and you can save 5-20 percent by opting for pay as you drive insurance instead.
If you are troubled by the high premium of car insurance, then you should opt for ‘pay as you drive’ insurance. Car insurance has now been made standard across the country. Even if your car hits the road once a month or less, you will need to buy at least a third-party motor insurance. Also if you have included car insurance with own damage, then you have to pay a heavy premium for your car. Motor insurance policies have become better per customer over the years .
Car owners now have the option of customizing their vehicle insurance policy. The ‘pay as you drive’ insurance policy is a comprehensive own damage (OD) plus third party (TP) policy where the third party premium will be determined as per the norms while the own damage premium will be calculated on the basis of kilometers You plan to drive in a certain time frame. Insurance companies usually offer this as an add-on cover.
This is how insurance companies do tracking
There are two types of ‘pay as you drive’ policies – one based on kilometers and the other based on the number of days the insurance policy runs. Kilometer based plans generally start from 2,500 kms per year and have different slabs of 5,000 kms, 7,500 kms, 10,000 kms etc. Insurance companies usually install a tracking device in your car or use a mobile application to measure usage.
Can save up to 20%
‘Pay As You Drive’ covers are based on a simple principle that if you drive less, you should pay less premium for insurance. If you are sure of less vehicle usage during the year then instead of a flat rate, you can pay the insurance premium as per your actual usage. The premium for ‘pay as you dry’ is lower than normal car insurance, but it depends on the insurers.
Now if you choose to pay as you drive, how much will you be saving? So the higher the slab you choose, the higher the premium and vice versa, people opting for pay as you drive insurance can save 5-20 percent.
Understand the whole story like this
Let’s say under the ‘pay as you drive’ kilometer benefit add-on cover, you can claim a benefit of up to 25 per cent of the basic self-damage premium if you drive less than 10,000 kms in a year. The discount will vary depending on the kilometers you drive. If you continue to renew the policy with the insurer, you get an additional discount of 5 percent on the basic damage premium in case there were no claims in your previous policy.
What happens if you exceed the kilometer limit? Normally, the third party cover will remain active but there will be no self-damage cover in case of a claim. Generally insurers give you the option to increase your coverage with more kilometers when the mileage plan you have already chosen for that year expires.
Another form of ‘pay as you drive’ policy is on/off motor insurance, where you can switch on your own damage cover while you are driving and switch it off when you are not using your car. You can switch off your own damage cover with the Kotak meter (switch on/off) when you are not driving. For every continuous 24 hour period where your own damage cover is closed, you will get one bonus day as a reward.
