Comparative Analysis of “Pay as you drive” car insurance v/s “Regular Comprehensive” Car Insurance
“Pay as you drive” is a comprehensive car insurance plan launched in the Indian market recently where the premium is charged only for the number of kilometres driven under the own damage section. The premium for the Third party section remains the same under the Pay as you drive section of car insurance.
In regular comprehensive car insurance the premium is paid for a period of one year or three years and the premium paid depends on many factors such as past claim experience of the insurance company, No claim bonus of the insured etc.
Let us understand the difference between the Regular Comprehensive insurance and Pay as you drive car insurance to decide which one caters to our needs.
||Pay As You Drive
||The premium for Pay as you drive is based on the number of kilometres slab selected for that particular year. Premium would be less compared to the regular comprehensive insurance as the usage would be less.
||The premium for Regular Comprehensive insurance is based on the loss ratio of that particular model apart from other factors such as make, model, cc and place of registration etc.,
||In pay as you drive insurance the usage is limited to a definite number of kilometres such as 2500km, 5000km, 7500km.
||In Normal comprehensive insurance the usage is not limited to kilometres. Customer is free to drive any number of km till the expiry of the car insurance policy.
||Once the number of kilometres is exhausted i.e. usage exceeds the particular slab, then by paying extra premium a higher slab can be opted or it can be converted to regular comprehensive insurance by paying pro rata premium.
||The validity of regular comprehensive car insurance is One year from the policy start date. After the one year period the customer can opt for renewal. Since there is no slab system, the renewal is to be done each year.
||Pay as you drive insurance is applicable only for the Own Damage section of the policy, hence the add-ons can be selected accordingly which will be valid only for the period of the slab i.e., the add-ons will exhaust once the number of kilometres is exhausted.
||The add-ons under the regular comprehensive insurance are to be taken at the time of policy issuance and are valid throughout the policy period.
||Third Party Coverage
||Third party coverage remains the same in both the types. The premium for third party is charged for one year from the policy start date.
||Third party premium and coverage are valid for one year period from the policy start date.
||Own Damage Coverage
||The coverage for own damage section is limited to the number of kilometres/ slab selected. Once the slab is exhausted the own damage covers ceases to function.
||The own damage coverage is valid for a period of one year under the regular comprehensive section.
||Own damage claims made under the pay as you drive section will be checked for the slab validity before settling the claims. Any own damage claim made after the exhaustion of slab would be rejected, however the third party claim would be settled as per the terms and conditions within the validity of the TP policy.
||The own damage claim made within the validity of the policy period are settled subject to the terms and conditions of the policy. The same applies to the Third party claims in the regular comprehensive insurance policy.
||Who Should Opt?
||Pay as you drive insurance is suitable to people who use their car rarely and for people having more than one year which are used rarely. If you use your car monthly once or twice then it is better to opt for Pay as you drive insurance to reduce the premium paid.
||People who drive their car frequently should go for regular comprehensive insurance as the number of kilometres driven would be higher than the slabs available under pay as you drive section.
Pay As you drive is a recent trend in the Indian market filed under the IRDA sandbox regulations and is to make an impact in the Indian insurance.
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