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Home >Money >Personal Finance >New auto insurance scheme lets you pay premiums only when you drive. Know more

Amid the coronavirus outbreak, when the whole world is shifting towards work-from-home culture and avoiding unnecessary travels, several insurance companies are introducing 'pay as you drive' policies for the customers. These unique motor insurance schemes allow the users to pay the premium only on the days they use the vehicle or the distance they travel.

Unlike traditional auto insurance policy, the policyholders will be able to customise their premiums. In a regular motor insurance policy, customer need to pay premium based on the car model. Here, they will have an option to choose premiums according to their driving habits. It means, buyers have to pay premium as much as they drive their cars.

Here are two 'pay as you drive' motor insurance policies — Edelweiss SWITCH and Tata AIG Auto Safe.

Edelweiss SWITCH

Recently, Edelweiss General Insurance announced an app-based auto insurance policy – Edelweiss SWITCH. This unique insurance scheme permits vehicle owners to switch 'on' and 'off' the policy whenever they want.

The insurance is calculated on the age and experience of the driver, the company said in a statement. Customers can use the mobile application to switch their policy cover 'on' and 'off', depending on whether they are driving that day.

However, "the vehicles will be covered the whole year against fire and theft, even if the policy is switched off at that time, since these incidents can happen even if the vehicle is not being driven," Edelweiss General Insurance said. The policy will only cover accidental damage when the insurance is switched 'on'.

"This driver based insurance will mean lower premiums for policyholders, as they will only pay as per usage," said Shanai Ghosh, ED & CEO, Edelweiss General Insurance.

Apart from the low premiums, the SWITCH insurance schemes cover multiple vehicles under one policy.

Tata AIG 'Auto Safe'

The AutoSafe device is linked to the car as the motor insurance policy becomes active and must be kept throughout the policy period. The device records all information, tracks the distance traveled and generates reports about vehicle health or driving patterns of the policyholder. The information collected is evaluated over time and each driver cum policyholder is allocated points based on performance. The device also contains motion sensor support and generates fuel-saving reports apart from monitoring aspects like hard braking, nighttime driving and acceleration.

Compared to the conventional policies, buyers will benefit from the Tata AIG's flexible kilometer-based package. Customers will have an option to choose between 2,500 kilometers, 5,000 kilometers, 7500 kilometers, 10,000 kilometers, 15,000 kilometers and 20,000 kilometers. If they exhaust all the kilometers within the policy period, they can buy additional kilometers by opting for the top-up kilometers option.

To promote safe driving, this policy offers bonus kilometers for good driving behavior at the time of the renewal. So lesser you drive, the lower premium you have to pay.

AutoSafe will be available on all policies offering personal accidental cover of 15 lakh for the owner and driver.

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