Introducing: Pay-as-you-drive (PAYD) insurance is being launched in the Indian market to provide tailored insurance premiums based on distance driven, rather than a fixed flat premium. The revolutionary concept caters to the needs of individuals who do not frequently drive but are required to pay the same amount of premium as those who drive often.
Soumya Das, a Kolkata based professional with two cars, was faced with the dilemma of whether to pay the same insurance premium for both his Honda City and Maruti Jimny, which would be used for different purposes. Insurance companies, recognizing the need for a more personalized approach, are introducing PAYD schemes to address these varying needs.
With PAYD, customers have the flexibility to choose a kilometre option based on their average daily run, and the premium is computed accordingly. This encourages cost savings for individuals who predominantly use public transport or work from home, as they are limited in their car usage. Kilometres-based plans typically start with a limit of 2,500 kms a year, with additional slabs available for 5,000, 7,500, and 10,000 kms, and so on.
This innovative add-on was designed to ensure that policyholders are not overcharged based on their car’s make and model, but rather on the frequency of the vehicle’s usage. Tracking is carried out through an OBD device linked to a mobile phone that captures the vehicle’s data and is linked to the system. Alternatively, it is based on the odometer reading at the time of the claim.
With PAYD insurance, the amount of savings depends on various factors such as the vehicle’s make, model, age, place of registration, and the number of kilometers it is driven in a year. The benefits provided on basic own damage premium vary by mileage band, with 25% being claimable on the premium for 0-2,500 kms, and gradually reducing down to 5% for 7,501-10,000 kms.
In conclusion, PAYD insurance is set to revolutionize the motor insurance industry by providing a more personalized and cost-effective solution for policyholders. This tailored approach ensures that individuals only pay for the coverage they require based on their specific driving habits and needs.
I have over 10 years of experience in the cryptocurrency industry and I have been on the list of the top authors on LinkedIn for the past 5 years. I have a wealth of knowledge to share with my readers, and my goal is to help them navigate the ever-changing world of cryptocurrencies.
