“Pay As You Drive” Is What You Need In This Cov-Ron time!
Our long time uninvited guest COVID-19 is now accompanied by our new guest Mr. Omicron. Most of the companies have adopted work from home policy for their employees and hence, there has been a drastic reduction in the kilometers driven nationwide. According to a recent report, the total number of kilometers driven is down by 50% countrywide.
It is clearly observable that most of the things are being carried out online, such as shopping, education, training and many more. With this evolution all around, it will be a smart decision for car owners to welcome a new and effective car insurance plan called the ‘Pay as you Drive’ insurance plan to make our drive more economical.
‘Pay as you Drive’ is an all-inclusive car insurance plan that charges you the premium based on the usage of your car. This insurance plan works with the help of a telematics device which monitors your mileage and driving behavior. The device tracks key behaviors such as braking, acceleration, cornering or times of day you usually drive. Accordingly, the insurance premium of your car will be decided by the company depending on the safety level of your driving.
In India, the approved companies providing PAYD car insurance include TATA AIG Car Insurance, Go Digit Car Insurance and Bharti AXA Car Insurance. These companies are required to sell at-least 10,000 ‘pay as you drive’ insurance policies within six months in order to offer it as regular car insurance.
History and Evolution
Pay as you Drive policy was first introduced in the mid-1990s by Progressive Insurance, an early pioneer in the field with its headquarters in Mayfield, Ohio, USA. Now there are many companies like All State, Farmers, Liberty Mutual, State Farm, GEICO and many more offering PAYD to the car owners.
In early 2000, insurance companies started to emphasize the installation of telematics and tracking systems in premium cars. In 2007, PAYD was first launched commercially. In 2008, there was a heavier adoption in the industry and in 2010; many companies like Qualcomm introduced its PAYD solution. Renault also introduced something similar for fleets.
PAYD and Driver Safety
Drivers vaguely realizes the link between their safety records and their insurance costs. Unless their price goes up drastically after encountering an accident, damage or a high speed fine ticket, they do not usually link price to their way of driving. Telematics provide immediate feedback to the driver whenever there is faulty driving and hence the driver can change bad habits and develop safe driving. Telematics provide feedback on simple data like distances driven, frequency of operation, braking and acceleration, and driving patterns. The feedback provided by the installed telematics helps build awareness and drivers can realize the significant link between driving behavior and insurance costs.
A Willis Towers Watson study indicates that crash rates fell as much as 80 percent in commercial fleets monitored by telematics.
How PAYD Works
The Pay as you drive car insurance policy works in a different way than your regular car insurance policy:
- You need to declare the car usage for the policy period of one year based on the total number of kilometers that your car will cover. You can choose one of the slab options provided by your
- The telematics device will be installed in your car by your insurance provider and this is absolutely FREE!
- If you wish, you can customize your PAYD plan by adding any add-on cover.
- The premium will be charged on the basis of the insurance slab you have selected and the add-on covers you have added.
- The telematics device installed in your car will track the kilometers driven and the remaining kilometer balance. It will also monitor the car usage and the driving habits.
- Once you exhaust your balance, you must get it recharged by contacting your insurance provider. The recharge is possible in between the policy tenure as well as at the end of the policy term.
Who Should Buy ‘Pay As You Drive’ Insurance?
Car usage varies for different kinds of people. Some use their cars on a daily basis, while others may not use it as much. Considering the variance in car usage behaviors of car owners, the Pay as you drive insurance policy has been designed for the following kinds of car owners:
- Pay as you drive policy is effective for those people who use their car very less.
- It is ideal for those car owners who own more than one car and do not use all the cars equally.
- It is perfect for those car owners who choose to travel in public modes of transport rather than their personal cars.
- It is advisable for those car owners who travel out of station frequently and do not get sufficient time to travel in their personal cars.
How To Buy Pay As You Drive Insurance?
In order to purchase a Pay as you drive car insurance, please follow the below steps:
- Visit your car insurance provider’s website.
- Choose the option of purchasing car insurance.
- Choose the usage slab option.
- Enter the details of your car’s odometer.
- Enter Know Your Customer (KYC) details.
- Fill ‘Customer Consent Form’.
- Select any add-on covers that you want.
- The premium amount will be displayed to you.
- Pay the premium amount via the payment options available.
- Process completed and you will be issued with the insurance.
Let’s Wrap Up!
Paying high premiums for your car during this unfortunate pandemic period is a major concern for the car owners. Pay as you drive (PAYD) is indeed a smart decision that will save you from paying high premiums as the majority of car owners are unable to use their vehicles most often, most of the things being carried out online, from jobs to shopping.
Think about it!