Insurance Regulatory and Development Authority of India has approved Pay-as-you-drive insurance scheme. Let’s have a detailed look at the benefits available through this scheme…
Vehicle insurance provides coverage for damage to a car or bike as a result of a collision, accident, death or natural calamity. For this specific amount has to be paid by the vehicle owner to the insurance company. It is everyone’s duty to know whether the insurance amount we pay every year is beneficial to us.
The Insurance Regulatory and Development Authority of India has approved the Pay-as-you-drive insurance scheme to benefit both the customer and the insurance company. Let’s have a detailed look at the benefits available through this scheme…
1. Insurance Plan:
The insurance premium for a vehicle depends on its mileage and the quality of the vehicle. The Insurance Regulatory and Development Authority of India, (Irdai) has introduced a type of comprehensive car insurance scheme where insurance companies charge premium based on the usage of the car. Under the Pay as you drive insurance plan, the premium amount can be paid based on how often the car is used depending on the total number of kilometres.
The scheme allows buyers to set a mileage limit for their cars and offer a discount over the normal premium. And in this the insurance is valid only up to the limit chosen by the policy payer. For this insurance companies offer three tiers of 7,500 km, 5,000 km and 2,500 km. Customers with low vehicle usage can benefit from taking care of their vehicles and following traffic rules.
2. Floater Cover:
Similar to floater health policies, the insurance regulator has floater coverages for vehicles. In this, vehicle owners can combine multiple vehicles under one policy. In health insurance, floater policies are very popular, where the names of several members of the same family can be incorporated in one policy. Similarly, floater coverage in auto insurance refers to different vehicles owned by the same family, registered under different names. Bringing them under one insurance.
3. Quality of Driving:
Irdai allows insurance companies to offer benefits based on driving quality. A telematics device is installed in the car to monitor the condition of the vehicle and the driving habits of the user. Data is interpreted to provide discounts for careful operators. After installation of this device, rash and careless drivers are also likely to be fined.
4. Limited Benefits:
A closer look at the terms of some auto insurance policies reveals that they have limited benefits. For example, if you opt for a 7,500 km slab, you will only get a 10% discount on the regular premium. The discount applies only to your own damage premium and does not affect the mandatory third-party premium and other add-on features. And if you opt for the lower limit slab of 2,500km, you’ll get more attractive discounts. But in this scheme only vehicles traveling less than 7 km per day can be insured.
5. Exceeding the limit does not escape:
There is no problem if you drive more than the slab limit of your purchased insurance policy. You can change your policy to an unlimited or higher slab policy. Before you exceed this limit you should have done well in driving. It is not possible to change the insurance policy limit of an accident or claimed vehicle.
6. Privacy Impact:
Installing telematics devices is another problematic issue as it creates privacy concerns for the car owner. And while this will reduce the premium for insurance, the cost of tolerating the device falls on the policyholders. And you should opt for a pay-as-you-drive policy only if you have no qualms about the insurance company having all the data about your car’s movement 24X7.