What is Pay as You Drive Insurance (PAYD)

What is Pay As You Drive (PAYD)?

Pay as You Drive (PAYD) is an advanced type of car insurance cover where the policyholder can have an Own Damage premium at reduced costs. The exact premium depends on the number of kilometers the insured vehicle covers during the policy period. It is a type of Comprehensive Car Insurance Policy, but as an insured, you can save on the premium as per the usage of the vehicle during the policy period. In other simple words, you also can name it as "drive less pay less" car insurance.

The concept of PAYD cover is quite new in the market. IRDAI issued a press release on 14th January 2020. It approved ideas, as submitted by intermediaries and insurers for the Regulatory Sandbox. One such concept was that of PAYD cover or usage-based motor insurance. Thus, in India, some auto insurance companies now offer PAYD covers.

Features of Pay As You Drive Insurance Policy

Here are some amazing features that you can get with PAYD policy:

1. Lower Premium

If you drive your car occasionally, you'll pay a lower premium compared to a standard Comprehensive Car Insurance Policy, where the premium isn’t based on how much you drive.

2. Customization

The insurance policy can be customized according to the estimated use of your car by estimating the distance you are going to cover.

3. Flexibility

If you feel that you are getting close to the limit selected in terms of distance covered, you can easily add more kilometers to your policy making it very easy to extend the coverage period.

4. Policy Duration

Usually, the Pay as You Drive insurance is taken for a period of one year.

Discounts Available under PAYD Policy

How Does Pay As You Drive Insurance Work?

Before buying PAYD Insurance online, it's important to know how it works:

1. Declare Car Usage

First, declare the amount of your car usage for a one-year policy period by estimating the total kilometers driven over the year.

2. Odometer Reading

To get the benefits, upload a video of your car's current odometer reading before the end of the insurance period.

3. Premium

After approval, you can get upto 25% discount on your own damage insurance.

4. Claim Process

Claims are normally settled up to the specified kilometer limit. If the claim exceeds this amount, you will be required to pay the extra amount or be partially liable to pay for it.

What Is Covered and Not Covered in Pay As You Drive Insurance?

Who Should Buy Pay As You Drive Policy?

Now you know that PAYD (Pay As You Drive) is a smart way to save on car insurance premiums by paying based on how much you actually drive. This option works best if you:

• Don't drive often but still pay the same premium.
• Are a senior citizen or older and drive less frequently.
• Are a college students still getting used to driving.
• Have multiple cars and don't use one as much as the others.
• Rent a car and only need short-term insurance.
• Work from home or live in a remote area where you drive very little.
• Live in a small town where annual car usage is under 10,000 km.

Famous Insurance Providers of Pay As You Drive Policy

• New India Assurance
• ACKO General Insurance
• ICICI Lombard
• TATA AIG General Insurance
• Zuno General Insurance
• Reliance General Insurance
• Kotak General Insurance
• HDFC ERGO General Insurance
• Digit General Insurance

Conclusion

Pay As You Drive insurance is a great option for people who don't use their car regularly, like occasional drivers, seniors, or those working from home. It allows you to save on premiums by only paying for the distance you drive. With its flexible and user-friendly features, PAYD offers a practical solution for budget-conscious drivers looking for full protection without the high costs of traditional car insurance.