By Ashwini Dubey
Traditionally, car insurance would come in the form of standardised plans. So, an individual user’s driving needs and habits would be irrelevant to his/her premium due. Let’s say that you are someone who typically carpools or travels by cab. The law would still need you to buy a regular motor insurance plan for the year. So, even if your car hits the road only about once a year, you would nonetheless be required to pay a hefty premium.
Fortunately, motor insurance has become more customer-friendly over the years. Now, car owners have the option of choosing their insurance plan based on their usage. As you can imagine, this comes with a variety of benefits for policyholders. Let us take a look at some of them.
Lower car insurance premium
It is only fair that your insurance premium is calculated based on how often you need to drive your car. For instance, if you live in a relatively smaller city, chances are that you drive a maximum of 5,000 km. There is no reason for you to pay the same premium as someone who drives 15,000 km would pay.
In such a scenario, a plan like Reliance’s Pay As You Drive (PAYD) is ideal for you. It comes with four predefined driving ranges: 2,500 km, 5,500 km, 7,500 km, and 10,500 km. Even if there is one odd month where you expect to drive more than usual, you can easily increase their driving limit as needed. If your driving limit usually sits somewhere around 15,000 km, then Digit’s PAYD plan might be a sensible choice for you.
Customisable plans
In today’s age of hyper-personalisation, a remote control of sorts even for insurance makes perfect sense. This is where a plan like Kotak Meter (Switch On/Off) Cover comes in. This plan allows you to turn off your own-damage policy when not driving. For every continuous 24-hour period in which the Own Damage cover is ‘off’, you will be rewarded with one bonus day. Policyholders can even receive cashback at the end of their policy period. This gives a more sustainable touch to car insurance.
Also Read: 7 benefits of having Own Damage Car Insurance
Brownie points for driving well
The new PAYD model enables tapping of a policyholder’s driving habits. The user’s plan can then be customised accordingly. So, someone who tends to follow driving rules gets a plan with lower premiums. This calculation is based on the information received from your vehicle’s GPS tracker. There are algorithms in place that recommend the appropriate premium for each driver. This also factors into whether or not the user respects traffic signals, and or drives at a safe speed.
Another great add-on to have is Pay How You Drive. This enables tapping of a policyholder’s driving habits. The user’s plan can then be customised accordingly.
Easier process for multiple vehicles
If you own more than one car, you would typically have to pay a higher premium as your vehicles would be insured under two separate policies. You would also be required to fill out and maintain multiple policy documents for this. The PAYD model solves this problem with floater policies, i.e. a single combined policy for multiple vehicles. This way, you have to pay a lower premium as the benefits of your single plan are valid for multiple vehicles, even two-wheelers. This new model is efficient in terms of time, money, and effort.
The Pay As You Drive model is an evolved, more customer-friendly approach to insurance. It is a must-buy for anybody who owns a vehicle.
The author is head, Motor Insurance Renewals, Policybazaar.com
Based in New York, Stephen Freeman is a Senior Editor at Trending Insurance News. Previously he has worked for Forbes and The Huffington Post. Steven is a graduate of Risk Management at the University of New York.