Car insurance policy by use: has Covid-19 changed the way you drive?


By Ashwini Dubey

Although the pandemic and the days of restricted mobility are over, for now there is no denying that it has changed the world forever. If we look back, the silver lining of the Covid-19 era was technological innovation across the globe. One such welcome move in an era when vehicles were parked in garages or basements more often than they were driven was the regulatory sandbox launch of pay-per-drive policies by the ‘IRDAI (Insurance Regulatory and Development Authority). The innovative product allowed the policyholder to pay the premium based on usage and save on the premium.

As times changed, so did policies and the regulator began to take into account the changing driving habits of people. Recently, IRDAI announced the official launch of options such as pay-as-you-drive, pay-how-you-drive and family floater policies. With technology helping these innovations, let’s see how you can now easily customize your auto insurance policy and premium based on your usage and driving habits.

Save on premium with new pay-as-you-go policies
While we are far from complete confinement times, mobility has definitely changed for sure. Many companies have decided to move away completely, while others have taken the hybrid approach. Additionally, several people are still practicing restricted contact and safe practices for Covid-19 due to elderly members or sick young children at home. People also avoid getting out of their cars to avoid traffic and instead opt for public transport or taxis. As one would imagine, vehicles in these cases would not be driven at full capacity, but owners could still pay the full premium.

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In such situations, the pay-as-you-go add-on allows the policyholder to pay the premium based on their driving frequency and preferences. Under this, there are various options available to the policyholder. Some insurance companies have developed mileage-based premiums, while others have an on and off mechanism in the policy. There is a tracking device or mobile app which is used to count the kilometers. Alternatively, one can deactivate their insurance policy during the days when they are not driving their vehicle.

Get rewarded for good driving with the pay your drive feature
Now, safety is not the only benefit for safe and responsible driving. Depending on your risk profile, you may choose to pay a lower premium. Under the pay-how-you-drive add-on, the risk of violating traffic rules, failing to obey traffic lights, exceeding the speed limit and subsequently driving too many complaints are taken into account. Once again, the tracking device and algorithms will be used to analyze the insured’s driving habits and they will be rewarded with a lower premium for safe driving.

Apart from a premium reduction, this innovative addition will also help instill good driving habits in vehicle owners.

Reduce your premiums with floating family plans
What was once a popular feature in health insurance policies is now also available for car insurance. While safety on the road is paramount, auto insurance could be a costly affair for families who own multiple vehicles. Most likely, one could have an SUV for distant family outings or road trips and have another sedan or hatchback for regular use. Not to mention that two-wheelers are part of every household and should also be insured. Now, with a floating policy, you can easily cover all your vehicles and lower the premium. This works great for owners who might have multiple vehicles registered in their name. A family floating plan would meet the needs of multiple vehicles and ensure their protection.
The author is Manager, Auto Insurance Renewals,


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