Pay as you Drive Motor Insurance

Beep, beep, beep beep…Meera’s phone alarmed her. The notification was from the motox app - your interface for motor insurance. She immediately dialed Karthick, her son who was returning from his night out with friends and was driving. The phone kept ringing without an answer. Just when Meera was about to go into anxiety, Karthick called back. She sensed the panic in his “Hello maa, I am sorry” - he had been awake for 36 hours straight and was driving back home, fatigue had now gotten the better of him and he blinked. While it seemed momentary to Karthick, the telematics device in their car gave a different picture.?

While Karthick was grounded for a week, telematics saved the day for the family.?

Telematics, the latest addition to the world of insurance tech is set to transform the way motor insurance is bought, sold and serviced.?

IRDA, realizing this potential has renewed its thrust toward innovation, and allowed technology enabled concepts like pay as you drive (PAYD) motor insurance.?

The broad idea of pay as you drive insurance is your premiums would be linked to the number of kilometers driven by the car. This way, if you don’t use your car, you will be charged a lesser premium.?

Some of the salient features of PAYD include

• ?It applies to the Own Damage (OD) portion of your motor insurance. The Third Party (TP) cover is independent, as are the TP premiums.?
• A telematics device is installed in your car by the insurer. Since these are early days, the insurer bears the cost of the device.?
• The policies come with options for usage slabs such as 0-2500 km, 2500-5000 km and above 7500 km. Based on the anticipated miles that your car will travel over the course of a year, you select the appropriate slab and pay the premium due for the slab. The OD cover exhausts the moment the car crosses the kilometre threshold. While you remain covered for TP damage, the OD cover can be renewed on run-time.?

?While the policy poses challenges like

• ?Rigging of the telematics device
• Misuse of information gathered by the device
• Complexities associated with exhaustion of cover and start of new cover these don't seem insurmountable.?

So, while Karthick has vowed to thrash the device the moment he gets out of his curfew, we remain positive that PAYD is a step in the right direction.