Ever wondered how is premium on your cars are calculated? It takes into account the car model and engine cubic capacity irrespective of how much you drive or how you drive. What if your driving behaviour and the distance you cover with your car play a role in fixing premium? Good news for many.
Within two weeks after insurance regulator IRDAI allowed insurers to launch tech-enabled add-ons such as pay-as-you-drive and pay-how-you-drive, Digit Insurance has launched one of the add-ons – pay-as-you-drive. They have plans to launch the other one soon.
Meanwhile, insurers such as Bajaj Allianz General Insurance, ICICI Lombard General Insurance, Edelweiss General Insurance and Liberty General Insurance, among a couple of others, have already experimented with the pay-as-you-go model under the regulatory sandbox. The insurers sold a specific number of policies under a specific period as defined by the regulator.
We take a look at what all you should expect through these add-ons. But before anything remember these add-ons are linked to own damage (OD) cover. “Customers must be aware that vehicle(s) proposed to be covered under new add-ons must have an annual Third Party liability policy, which is a statutory requirement under Motor Vehicle Act and Rules,” explains T A Ramalingam, Chief Technical Officer, Bajaj Allianz General Insurance.
Pay as you drive
If you drive less, you should go for this add-on that will help you save some cost on the premium amount. There will be different packages kilometer-wise. You may choose the one that suits your needs. Digit Insurance, which has already launched the add-on, says customers who have been driving up to 10,000 km per year on an average from the time of buying the vehicle will be able to avail the discount.
“Digit will use odometer reading, telematics data and annual kilometre opted to determine the discount, which can go up to as high as 25%. Customers will be able to complete the process within 5 minutes using tech-enabled video pre-inspection and finish the entire policy issuance process in less than 30 minutes,” the company says.
“This add-on should prove very useful for gig economy workers and professionals besides those who drive company provided vehicles, says Susheel Tejuja, Principal Officer, Founder & Managing Director, PolicyBoss.com.
Pay how you drive
In this add-on, insurers will analyse your driving behaviour through a device. This device will analyse data points such as traffic violations, overspeeding and excessive braking etc. How you perform on these parameters will determine the insurance premium for you.
“Good driving behaviour could help save 10-15% on insurance premiums while bad driving behaviors could result in insurance premiums increasing by 30-40% as well. It’s early days to say anything definitive because large amount of data needs to be pooled for analysis. So once more data is aggregated, clarity on savings would emerge,” says Tejuja.
READ MORE: How to choose the right motor insurance policy?
If you own multiple vehicles – two-wheelers or four-wheelers – you don’t have to buy separate insurance policies for all. Just like health insurance, now you can buy a floater policy covering all vehicles under your name. “With the floater policy option, the insured can purchase one add-on motor cover on a floater basis for multiple vehicles the insured owns be it either four-wheeler or two-wheeler vehicles which basically makes premium affordable but at the same time also makes it easier for the insured to renew motor insurance policies for multiple vehicles,” explains Ramalingam of Bajaj Allianz.
The three add-ons are quite useful and you should avail these once more insurers launch them.
Aprajita Sharma is a freelance journalist and a certified financial planner. She can be reached at @apri_sharma on Twitter and LinkedIn.