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Pay As You Drive/Go Car Insurance

The insurance industry keeps evolving to cater to the varying needs of customers. The evolution of insurance purchases from traditional purchases to a digital mode of purchase has brought about a big transformation in the insurance industry.

The newest transformation in the Motor Insurance space in India has been the introduction of ‘Pay As You Drive’ insurance, which has already been proven to be very successful in foreign countries.

While some insurers name this policy as ‘Pay As You Drive’ Insurance, others call it ‘Pay As You Go’ / ‘Pay As You Use’ / ‘Pay Per km’ Insurance.

Read on to know all about Pay As You Drive car insurance.

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What is Pay As You Drive Car Insurance?

Tired of regularly paying car insurance premiums even though when you are not driving? If so, then fret not, as Pay As You Drive has been recently introduced to help those who occasionally drive. Pay As You Drive, also called Kilometre Benefit Add-on Cover as the name suggests is a type of cover where you pay the premium only when you drive. With the Pay As You Drive cover, if you drive for a lesser distance that is less than 10,000 - 15,000 km, then you can include this type of cover in your car insurance plan.

Features of Pay As You Drive Car Insurance

Given below are few of the features of Pay As You Drive Insurance Policy

  • The tenure for Pay As You Drive policy is one year
  • The policy can be customized by adding various add on covers by paying additional premium
  • The own damage premium is decided based on the usage i.e. the slab of the kilometers covered

Calculate Your Car Insurance Premium Online

Select your car brand

  • Maruti
  • Hyundai
  • Honda
  • Toyota
  • Mahindra

Which city is your car registered in?

  • Ahmedabad
  • Bangalore
  • Chandigarh
  • Chennai
  • Gurgaon

When did you buy your car?

Have you made a insurance claim in the previous year?

What is Covered Under Pay As You Drive Car Insurance?

Pay As You Drive insurance provides coverage in case of the following:

  • Damages caused due to road accident
  • Vehicle theft
  • Damages caused due to man-made or natural calamities
  • Damages caused due to fire and explosion

What is Not Covered Under Pay As You Drive insurance?

Coverage under Pay As You Drive insurance is not provided in the case of the below:

  • Damages caused when driving under the influence of alcohol
  • Damages caused when driving without a valid driving license
  • Regular vehicle wear and tear
  • Mechanical or electrical breakdown of the vehicle

Pay As You Drive Insurance Eligibility

When purchasing a Pay As You Drive policy for your car, you need to keep certain points in mind such as the Type of Car you drive, the km you would be covered in a year, the Previous Year Claim status, etc. Given below are a few parameters which few insurers take into consideration before issuing Pay As You Drive policy to you -

Non Premium cars

Pay As You Drive policy is applicable on those cars where the original price of the car is less than 30-40L, again depending on the insurer to insurer.

Kms you Would Drive in a Year

Though this is not a stringent requirement, you need to inform the insurance company about tentative kms you would be covered in a year.

For instance: Digit insurance has a strict requirement around Pay As You Drive policy to be given to users whose avg. yearly usage < 15,000 km per year

Previous Year No-Claim Bonus

While this factor is again not a strict requirement for many insurers, some insurers do have a requirement around NCB > 0% However, some insurers on a case-to-case basis allow Pay As You Drive policy issuance if there's no claim in the last year along with NCB = 0%.

Also, claiming in the previous year might make you ineligible to avail Pay As You Drive coverage.

Ownership Transfer

Some insurers do take into account used cars/ownership transfer cases while checking eligibility for Pay As You Drive

How Does Pay As You Drive Car Insurance Work?

Pay As You Drive car insurance works similarly to a regular car insurance policy. However, the only difference is that the own damage cover is available only till the maximum number of kilometres is opted for under the plan.

When buying the Pay As You Drive plan, the policyholder has to do the following -

Declare Car Usages

Firstly you need to declare the car usage for the policy period (which is of 1 year) based on the different kilometres slabs provided by the insurer.

Odometer Reading

Based on the insurer to insurer, you will either be required to upload a video or a photo to declare the odometer reading of your car before the policy expiry date.

In some cases, you might be required to take a video or a photo of the vehicle number and chassis number

No Telematics

Pay As You Drive plan is based on the declaration of the customer and no telematics device will be installed in the car.

Premium

Depending on the various km usage slabs provided by the insurer, you can receive discounts on your own damage insurance premium.

The premium for the Pay As You Drive policy is decided based on the number of kilometres your car will be driven in the following year. You can choose from the insurance company’s distance travel slab and make an informed decision regarding distance travelled vs. premium charged. Given below are the slabs as samples -

  • Below 2,500 km
  • More than 2,500 km but less than 5,000 kms
  • More than 5,000 kms but less than 7,500 kms
  • More than 7,500 kms but less than 10,000 kms
  • More than 10,000 kms

The higher the slab you choose, higher will be the premium and vice versa. If you feel that your car will cover a distance of 4,000 kms in a policy year, then opting for below ‘More than 2,500 kms but less than 5,000 kms’ slab would be the right choice as it will help you save money.

Additionally, if anytime during the policy period, you feel that the km limit you mentioned in the policy will get exhausted then you can further top up the kms. However, before deciding on the kms, please check on the policy terms and conditions.

Claim Process

Your claim will be processed as normal if your km usage is within the km slab bought by you at the time of policy buying. However, if your claim comes post exhaustion of the km limit then you may be asked to pay a certain amount at the time of claim in the form of a co-payment.

How to Buy Pay As You Drive Car Insurance?

Given below is a very simple process to purchase Pay As You Drive policy for your car. The process might vary depending on the insurance company you choose.

  • Research on the insurance companies that offer Pay As You Drive
  • Read about the features, inclusions and exclusions of the policy
  • Enter your basic details
  • Enter details about your car
  • Declare the right information about your car
  • Submit basic documents such as your identity proof, address proof, etc
  • Declare the kilometers you plan to cover in a policy year
  • Select the right km slab along with the add-on covers offered
  • Upload the Odometer Reading (picture/video) along with some images such as the Vehicle number and Chassis number
  • Proceed with making the payment
  • Download the car insurance policy that you receive on your registered email address

What Happens if the Declared Car Usage Limit is Exhausted?

Exceeding the declared car usage limit in your insurance policy can have implications on your coverage. Here’s what typically happens:

  1. Impact on Coverage: If your car insurance policy includes a limit on usage (like a certain number of kilometres or hours), exceeding this limit might result in reduced coverage or even a lapse in coverage. This means that any claims made after surpassing the limit may not be honoured.
  2. Policy Review and Adjustment: It’s important to contact your insurer as soon as you realize that you're likely to exceed the declared limit. The insurer may review your policy and suggest adjustments or upgrades to ensure continuous coverage.
  3. Additional Premiums: Increasing the usage limit on your policy might lead to additional premiums. The insurer will calculate the new premium based on the revised usage limit.
  4. Risk of Non-Renewal or Policy Cancellation: In extreme cases, consistently exceeding the declared usage limit without notifying the insurer could lead to non-renewal or cancellation of the policy at the time of renewal.

Always keep your insurer informed about your car usage and update your policy if there are significant changes in your driving habits or car usage to avoid complications.

Things to know about Pay As You Drive insurance cover

Here are a few important highlights of the Pay As You Drive insurance coverage that you should know about.

Regarding the purchase of the policy:

Currently, not all insurance companies are offering this type of policy. To purchase this type of insurance, you have to do some basic research online or get in touch with your insurance provider. Based on the service offered by the insurance company, you can purchase the plan either online or offline.

The following information has to be submitted to the insurance company at the time of policy purchase.

  • Odometer reading
  • Chassis number, in some insurers
  • Complete car details such as make and model, date of registration, etc.
  • KYC details and other documents as required by the insurer

Things to Keep in Mind When Purchasing Pay As You Drive Car Insurance Cover

Car usage varies for different kinds of users. While the frequency of usage for some people is higher, the frequency for some people might be very low. Hence to allow customers to pay optimal premiums based on their actual usage, the Pay As You Drive Car Insurance has been designed for the following type of users -

Multiple cars

In case you own multiple cars and then the Pay As You Drive plan is recommended for the car having lower usage (less than 10-15k kms per year)

Usage of the vehicle

  • If you live in a Tier 3 city and beyond, and your yearly usage is less than 10-15 kms per year, then the Pay As You Drive cover is the right plan for you.
  • If you mostly commute through public transport and rarely use your car, then the Pay As You Drive cover is the right plan for you.
  • If you have to travel out of the station regularly and are unable to use your car a lot, then the Pay As You Drive cover is the right plan for you.

Based on the usage of the car, you should go for the different Pay As You Drive slabs such as 2,500 kms / 5,000 kms / 7,500 kms / 10,000 kms / 15,000 kms. But in case you exhaust the kms on your base plan, you can always top up with 2,500 kms / 5,000 kms / 7,500 kms / 10,000 kms

Difference Between Pay As You Drive Car Insurance and Comprehensive Car Insurance

Confused between choosing Pay As You Drive cover or comprehensive car insurance cover for your car? Read about the difference between the two.

Comprehensive vs Pay As You Drive

Parameters

Comprehensive

Pay As You Drive

Definition

This type of insurance provides all round protection to your car, covering third party as well as own damage liabilities

Same as that of Comprehensive, the only difference being that there is a discount in the Own Damage premium depending on the km slab selected by the user

Customization

Coverage under this type of add on can be enhanced with various add ons such as zero depreciation, engine cover, etc.

Same as Comprehensive

Coverage

Damages caused due to man made, natural calamities and theft are covered

Damages caused due to man made, natural calamities are covered. Theft coverage varies from insurer to insurer

Premium

The premium for this type of insurance is decided based on make and model, engine capacity, etc.

The premium for this type of insurance is not just decided on make and model, engine capacity, etc. but also on the usage i.e. kilometers covered per year

Claim Settlement Process

Normal claim process

Claim process remains the same just that if your claim comes post exhaustion of the km limit then you may be asked to pay a certain amount at the time of claim in the form of a co-payment.

Within policy period add-ons

Not possible

If anytime during the policy period, you feel that the km limit you mentioned in the policy will get exhausted then you can further top up the kms as add-ons during the policy period

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    FAQs related to Pay As You Drive insurance

    • When was Pay As You Drive cover introduced?

      The Pay As You Drive insurance cover was introduced in the year July 2022 by the Insurance Regulatory and Development Authority of India
    • Does Pay As You Drive cover provide coverage for third party damages?

      Yes, Pay As You Drive insurance cover does offer coverage for third party damages
    • What is Pay As You Drive in car insurance?

      Pay as you go in car insurance is a non-telematics based car insurance plan that insures your car depending on the usage i.e. the kms you cover and declare yourself.
    • Does Pay As You Drive cover vehicle theft?

      Yes, vehicle theft is covered under Pay As You Drive insurance. However, it is best to go through the policy terms and conditions as every insurer may not offer coverage for the same

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