PAY AS YOU DRIVE CAR INSURANCE

Are you paying high car insurance premiums even though you don’t drive your car regularly? Is the cost of premiums straining your budget?

With Pay as You Drive Car Insurance, you can save money by paying premiums based on how much you actually drive. This innovative insurance plan offers flexibility and affordability, ensuring you only pay for the miles you cover.

Switching to pay-as-you-drive insurance can stop you from overpaying for coverage you don’t need! Continue reading this blog to learn about the Features, How It Works, Steps to buy, and Who Should Opt for pay-as-you-drive car Insurance.

 

What is Pay as You Drive Insurance?

Pay-as-you-drive car Insurance is a kilometer-based add-on cover that allows you to pay premiums based on how much you drive. Unlike traditional car insurance, where premiums are fixed regardless of your vehicle’s usage, this innovative add-on adjusts your premium according to the distance you travel. This way, occasional drivers can enjoy significant cost savings on premium while staying legally insured.

Let’s make it clear with the following example.

Suppose you drive an average of 3,000 KM a year.

The pay-as-you-drive lets you pay only for those 3000 KM as a premium for your car insurance. If your Kilometers are exceeded, you can purchase top-up and continue driving. If these kilometers remain unused, then they can be carried forward to next year's policy.

Isn't it a fantastic option?

 

Features of Pay-As-You-Drive Insurance

Pay-as-you-drive insurance is an advantageous car insurance add on cover in many ways. Now, let's appreciate its features-

Key Feature	Advantage
Pay for drive only	If you drive the car less, then you need to pay the premium less.
Claim Benefit	You can claim 25% of the basic damage premium on driving below 10,000 KM.
Flexibility	You are allowed the premium only for the kilometer that you covered in a year. It would be lower than your fixed premium value for a year.
Practically Affordable	Paying insurance on usability saves your premium cost.
Discount on renewal	You may receive a discount while renewing your policy if you drive a car below the estimated kilometers.
Quick Claim	The claim process is smooth and fast on digital media.

 

How Does Pay-As-You-Drive Insurance Work?

Understanding the Pay as You Drive Insurance work is a bit easier.

The benefit of this facility will be available only as long as the policy is active. This type of insurance is not like the standard type of insurance. A policyholder is asked to pay the premium at the end of the policy period. It means that the policyholder must drive a car less than 10,000 KM within the policy time period. Then only the benefits will be provided to them on the basis of a total number of kilometers.

Let’s make it clearer with an example.

Rajan purchased a car insurance policy for a year. He drove the car less. The total kilometers consumed by his car were 5000 KM in a year. Now Rajan will have to pay the premium for consuming 5000 KM on completing the year. He can get this coverage only if he purchases the pay-as-you-drive insurance add on. In short, Rajan's car must cover a distance of less than 10,000 KM within the policy year.

Now, let's go over the necessary paperwork.

While proceeding with the pay insurance as you drive, you must have-

 

Declaration of Kilometers

You are requested to declare the number of kilometers the car cover will be driven for throughout the policy period. At the time of buying an insurance plan, there is an option to select “distance to be travelled”.

In short, you need to mention the anticipated distance your car will cover. According to this, you need to pay the corresponding premium. For this, you are required to show the odometer reading as proof.

 

Know Your Customer (KYC) Details

KYC details are mandatory for car insurance to verify a customer's address and other details. It helps to prevent fraud.

Once you fulfill the requirement, you can raise a claim. Insurance companies will assess covered kilometers throughout the policy period. Then they will provide you with the benefit.

 

Steps to Buy Pay As You Drive Cover

Now, let's move towards the process of buying Pay as You Drive Cover. Below are steps to be followed to get your benefit.

Step 1: Confirm whether the insurance company is providing such a plan or not through its website.

Step 2: Understand everything, like inclusions and exclusions about the policy and add-on.

Step 3: Look for a ‘Buy Now’ option. Input the values for personal information and car details in the form.

Step 4: Mention the required documents demanded by the insurer.

Step 5: Now, pick the add-on that you want and that suits your requirements.

Step 6: Pay the policy fees and download the policy from your registered email ID.

 

Who Should Opt for Pay As You Drive Cover?

1. Infrequent Drivers

People who hardly drive a car can opt to have PAYD insurance. It will be a practically affordable choice for them as they need to pay for what they drive.

2. People Preferring Public Transport

The people who like to roam the crowded city areas prefer to travel by public transport having their car. PAYD add-on would be a great option for them to reduce the car insurance premium if they don't drive often.

3. People With Large Car Collections

Niraj has plenty of cars in his collection. Sometimes he drives a Wagon R, sometimes he drives a Maruti Desire. But he doesn't drive a single car consistently. PAYD add-on would be beneficial for him to save premium.

4. Seasonal Drivers

Many drivers prefer to drive in the rainy season to avoid risks. Buying a PAYD add-on would be the ideal choice for them.  

 

FAQs

1. How Premiums Are Calculated in Pay As You Drive Insurance Policy?

Premium PAYD add-ons are calculated based on the distance covered by the car. The total number of kilometers that the car covers determines the premium. Fewer kilometers means less premium. Exceeding kilometers means higher premium.

2.What Factors Influence the Per-Mile Rate in PAYD Insurance?

In PAYD insurance, distinct factors are influencing the Per-Mile Rate. It includes the driving history, age, and credit score. Moreover, the location and type of vehicle also matter.  

3. What Are the Disadvantages of Pay-As-You-Drive Insurance?

Having a PAYD add-on may restrict your privacy. Tracking your location, distance covered, and driving habits may create issues. Plus, processing a claim with PAYD is a bit complex and time-consuming.