Benefits of Pay As You Drive Car Insurance 

Buying a car insurance policy may seem like a liability to many car owners due to the heavy premium rates. Traditionally, the premium for car insurance is fixed by insurance providers without much flexibility. But what if your premium amount becomes flexible and you become the one who can control it? Pay As You Drive (PAYD) car insurance is an innovative solution to this question. The way you drive your car and its actual usage are what determine your premium amount under PAYD car insurance. In this article, we will learn about this type of car insurance and why it is gaining popularity in the car insurance sector.

What is Pay As You Drive?

Also known as usage-based insurance, Pay As You Drive is a new-age, innovative option for policyholders who look for affordable car insurance options. As the name suggests, in this type of car insurance, your premium amount is not fixed but is decided based on the usage of your vehicle. People who do not drive their cars much and still have to pay a huge premium found it an unnecessary expense rather than a need. PAYD makes use of the technology to learn about the driving habits of the policyholder. The premium is then calculated on the basis of the number of kilometres your car has driven and your driving history. 

Benefits of Pay as You Drive

Financial Advantages of Pay as You Drive 

PAYD is an unconventional type of car insurance that is especially beneficial for those who do not use their car frequently, such as remote workers, retired people, public transport users, etc. This will reduce their financial burden and provide a fair pricing structure for the policyholders. This means that those who have low mileage will not have to compensate for those who have high mileage. The less you drive, the lesser will be your premium. 

Behavioural Advantages

Since PAYD insurance utilises technology to monitor your driving habits, such as speed, acceleration, etc., it encourages drivers to maintain a healthy driving habit. This will actually contribute to road safety and fewer road accidents. By incentivizing lower mileage, car owners may opt for other commuting options wherever possible. This will also have a good impact on the environment due to less traffic congestion and reduced greenhouse gas emissions. 

Technological Advantages

PAYD car insurance makes use of telematics. Telematics is a technology that helps track and analyse your driving patterns. The data collected from telematics helps decide the premium amount you will have to pay. This technology can be integrated with other services like emergency assistance, theft recovery, and timely maintenance reminders to add extra value to your insurance coverage. 

Market and Social Advantages

By encouraging car owners and drivers to maintain a good driving habit so that they can pay low premiums, the PAYD model makes car insurance an affordable and easily accessible product for policyholders. In the long term, it will also have a positive impact on the environment and the road safety of citizens.

Things to Consider When Using Pay As You Drive 

Although PAYD is an innovative idea to make car insurance affordable for many car owners, there are a few things to be considered:

Installation of Telematics and Privacy Concerns

Pay As You Drive Car insurance requires the installation of telematics, which tracks and collects data on driver's car usage. Many car owners may perceive it as an intrusion on their privacy. Therefore, it is important to know how the data is collected, stored, and used by the policy providers. 

Variation in Costs

PAYD may seem beneficial for those who do not use their car frequently. But for high-mileage drivers, this may be a cause for concern because they may end up paying more premiums, even higher than what they would pay in conventional coverage plans.

PAYD Insurance Availability

Though PAYD is gaining popularity in India, it is still not available everywhere. This can depend on the region and your insurance provider. Therefore, you should check if this option is available in your region and compare different options before you choose the final one. 

FAQs

Q: How is the data collected in PAYD insurance?

A: This is done with the help of a telematic device that is installed in your vehicle. This device tracks your mileage, your car usage, braking habits, etc. The data is then transmitted to your insurance provider.

Q: What will be covered by PAYD insurance?

A: Your car insurance policy will provide you coverage in the following circumstances:

• Any accidental damage to the vehicle
• Vehicle theft 
• Damage due to any natural or man-made disaster like floods, riots, etc.
• Fire accidents  

Q: Is PAYD insurance equally beneficial for all car owners or drivers?

A: PAYD insurance is good for low-mileage drivers and those who practice safe driving habits. However, it may not be the best choice for high-mileage drivers or those concerned about privacy issues. 

Q: What is the difference between Pay As Your Drive and conventional car insurance?

A: The premium amount in conventional car insurance is mainly based on the car’s make and model, add-ons, years of usage, and insured declared value (IDV). Whereas, the premium payable in Pay As Your Drive car insurance is mainly based on the distance covered by the car, the driving habits of the driver, etc.

If you want to know more about PAYD, reach out to us at +91-7551196989 or you can also email us your query at support@insurancedekho.com