Drive less than 10K kms in a year? This motor insurance policy charges a premium based on car's usage

Following the announcement by the Insurance Regulatory and Development Authority of India (IRDAI) permitting general insurance companies to introduce telematics-based concepts in motor Own Damage (OD) policies, Go Digit General Insurance has launched ‘Pay as you Drive’ (PAYD) add-on feature in motor insurance policy. ‘Pay as you Drive' policies charge a lower premium when the vehicle is driven less and charge higher when driven more. Here the premium is based on a policyholder’s risk exposure and distance driven.  

Under Go Digit Insurance Policy the discount will apply to anyone driving less than 10,000 kilometres per year on an average from the time the current owner bought it from the showroom. Digit will use odometer reading, telematics data and annual kilometre opted to give this discount, which can go up to as high as 25 per cent. 

PAYD policies are beneficial for those who do not drive their car much but still have to pay the same premium as a driver with heavy usage. People in small towns and people with multiple vehicles and retired individuals can benefit from the product if their usage is less. 

Kunal Jha, Head - Motor Products and Actuarial, Digit Insurance, said, “The company’s customer-first approach and tech agility has enabled us to launch the feature in record time. This usage-based add-on is launched initially with a 10,000 km-cap so that maximum people can avail insurance in a cost-effective manner. This will also be available through our partner distribution network, which contributes to majority of our motor business throughout tier 2, 3 and 4 cities as well.”

Recently Edelweiss General Insurance also launched SWITCH, which is an on-demand comprehensive motor insurance product, under the IRDAI’s Sandbox initiative. Recently, IRDAI came out with guidelines allowing insurance companies to launch telmatics-based motor insurance policies. 

Under the policy, the app detects motion and automatically activates insurance when the vehicle is driven, making it convenient for customers. Moreover, it rewards policyholders if they are driving well, as it measures both the quantity and quality of driving and calculates premiums accordingly.

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