Motor Insurance is something that is one of the must take insurance. If you use your car once a week and your neighbour uses his car daily, you both have to pay the same insurance premium. Since, you are driving less, there are less chances of damage but it is a bit unfair that irrespective of driving mileage, you have to pay a fixed premium.

This has been changed now with the introduction of ‘Pay as you Drive’ and ‘Pay how you Drive’ add-ons in the Motor Insurance policies.

Pay as you Drive

The ‘Pay as you Drive’ add-on is linked to your driving. While taking this add-on, you have to declare an approximate planned usage of your car. So, the premium is paid based on your mileage limit. Lower the mileage limit, lesser will be the premium. The insurance companies will track the kilometers travelled using geo-tagging technology. 

Pay how to Drive

Being a Safe Driver is now rewarded with a lesser premium. In this insurance add-on, you pay a premium according to your driving behaviour. So, if your vehicle has a history of fines and accidents, then you might have to pay more premium. You have to give your insurance company to live-track your driving so that they can assess you on the basis of speed and other metrics. 

But, what’s in it for Insurance Companies?

With this dynamic pricing of premiums, there is also a scope for insurance companies to increase their profits. The Insurance companies can better analyze the risk and charge high premiums. Also, by using technology enabled tracking, the companies can better identify the frauds and reject the fraudulent claims.

Applicability of these Add-ons

This dynamic premium option will be available only for Own-damage covers and not for Third-party covers. While purchasing motor insurance, most people buy Third-party cover because it is mandatory. The Insurance regulator has come up with this new rule to encourage people to buying ‘Own-damage’ cover as well. This will be a win-win for both the insurance companies and customers.

Floater Policy

Apart from the above dynamic pricing of premiums, the Insurance Regulator has also instructed to introduce Floater policies. This will make buying vehicle insurance more convenient for you. You can take a single insurance policy for all the vehicles you own whether it is a two-wheeler or four-wheeler. So, now you do not have to keep track of the expiry date of each policy.

Conclusion

So, now just by driving carefully, you can save big bucks on your insurance premium and also make your life simple by taking a single insurance policy for all your vehicles. This move will also help in expanding the reach of insurance companies to untapped markets.