Pay as you Drive Insurance

Pay-As-You-Drive insurance is a type of car insurance that allows you to reduce your premium amount based on the minimum usage of your vehicle. In this type of policy, your insurance premiums depend on the total number of kilometres or miles covered by your four-wheeler during the tenure of the policy.

Since it allows you to lower your insurance cost when you have not used your vehicle frequently, it is also known as a drive less pay less car insurance.

Pay as you drive insurance comes with excellent features and benefits. Some of them are as follows:

Lower Premiums: The primary reason behind the popularity of PAYD insurance is that it allows you to cut down on your insurance premiums if you have used your vehicle less.

As compared to comprehensive car insurance, you don’t have to pay a fixed premium amount regardless of how frequently you have used your car.

Customisable Plans: Another benefit of buying a pay as you drive plan is, it allows you to customise your policy as per your requirements. In simple words, you can define a limit with respect to the estimated distance your car will cover within the policy tenure and pay premiums accordingly.

Fixed Tenure: A majority of pay as you go car insurance policies from the reputed providers come with a tenure of one year or 12 months.

A pay as you drive car insurance policy works slightly differently than a regular car insurance policy. The following stages explain the working of this policy**-

Stage 1- Declaring Car Usage

Since the insurance premium amount of a PAYD policy depends on the total distance covered by your car, therefore, you need to declare an estimated number of kilometres your car will cover during the policy tenure.

When you purchase a pay as you drive policy online, you will need to give an input in the field called “distance to be travelled” or similar. Depending on this entry, your premium will be decided.

Stage 2- Providing Odometer Reading

The PAYD insurance policies offer discounts on the Own Damage component of an insurance policy. To avail of this discount, you must provide the odometer reading of your car before the end of the policy tenure.

This reading tells the exact distance covered by your car. It basically acts as proof at the time of making a car insurance claim or getting a discount.

Stage 3- Making Car Insurance Claim

If the distance covered by your vehicle is within the declared value, you can raise a car insurance claim.

For example, if your declared value at the time of purchasing a PAYD policy was 10,000 km, and the total number of kilometres covered by your car is within this limit, your claim will be settled without any hassle as per the terms and conditions.

Moreover, the claims settlement process in the case of a pay-as-you-go car insurance is very similar to the comprehensive insurance policies.

The type of coverage offered with pay-as-you-drive car insurance depends on the type of policy and your car insurance provider. However, below are the coverages that are typically offered by a majority of PAYD insurance providers:

Own Damage: This type of coverage covers all the damage done to you or your passenger, including medical injuries, vehicle damage, and even fatalities in a road accident involving your vehicle.

Third-party Damage: It is the minimum legal level of insurance coverage required from car owners in India. Most PAYD policies come with this type of coverage that offers financial support in the event of damages done to a third party or property with your vehicle.

Theft and Fire: Some pay as you drive car insurance policies offer coverage in the event of theft and fire damages done to your insured vehicle. In simple words, you can make a car insurance claim and get compensation if your car gets stolen or damaged due to a fire or an explosion.

Vehicle Breakdown: Multiple vehicle damages are also covered in most PAYD car insurance plans. You can either receive cash reimbursement or get your car repaired at the network facilities of your insurance provider in case it suffers damages as per the terms and conditions of the policy.

Should I purchase comprehensive car insurance or invest in a drive less pay less car insurance policy? If this question is bothering you, we have got you covered. You should consider opting out for a PAYD policy if you come in the following categories:

Seasonal Drivers

Some car owners drive their vehicles depending on the seasons. For instance, some of them like to keep their cars parked during the rainy season due to unpredictable weather and poor road conditions.

If you are among them, then you can avoid paying premiums for the time your car is kept in your garage by buying a pay as you drive policy.

Public Transport Users

A majority of Indian cities and towns, especially the bigger ones, have a serious traffic congestion problem. This is the reason why an increasing number of daily commuters prefer using public transport such as the metro, local trains, and buses instead of their own vehicles.

A majority of them take out their cars on weekends and holidays. In this scenario, PAYD insurance is a perfect and cost-effective solution.

Multiple Vehicle Owners

If you are a multiple vehicle owner, there are high chances of you driving any one vehicle more than the other (s). Since having car insurance is mandatory for every vehicle, you cannot simply leave any of your vehicles uninsured.

So, a good idea is to purchase a pay as you drive insurance plan for the vehicle that is least used by you. In this way, you can adhere to the legal requirements without dealing with the heavy premium amounts.

Retired Individuals

The pay as you drive car insurance policies are great for retired car owners for mainly two reasons: they use their vehicles less frequently and they don’t have a regular flow of income to afford high insurance premiums.

Less Frequent Drivers

Besides the above-mentioned individuals, pay-as-you-go insurance is an ideal solution for anyone who doesn't use their vehicles very frequently or someone who is on a budget.

A pay as you drive car insurance is a cost-effective insurance solution for car owners who use their vehicle in a limited manner. By opting for this type of insurance, you can get your vehicle insured in a budget-friendly way.

If you belong to the category of car owners mentioned in the blog, you can definitely purchase a suitable PAYD policy from a reliable provider like Tata AIG.

For more information on car insurance, get in touch with our team!

Is Pay As You Drive beneficial?

Pay As You Drive is an excellent usage-based discount which is particularly useful for those who use their cars less frequently. It allows the policyholder to earn a discount on the premium of his comprehensive or stand-alone damage policy.

Is PAYD available for a new car?

Pay As You Drive is available for cars that are at least one year old as the discount is based on the average kilometres of the previous years.

I am eligible for NCB. Can I get the PAYD discount?

Yes, the PAYD discount is available for both NCB and non-NCB. If you drive within the specified kilometres, your insurance policy will offer a usage-based discount.