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Usage-Based Car Insurance, the New Talk Of the Town
Mumbai, October 28, 2020
The global pandemic has changed spending habits. It has made everyone conservative with spending. Not limited to luxuries, things that are not required immediately are being deferred to a future date.
This trend is also observed in the motor insurance segment. Through innovation in technology, newer concepts are being introduced to offer coverage for applicants. One such upcoming type of car insurance is usage-based insurance policy.
What is usage-based insurance?
The Insurance Regulatory and Development Authority of India (IRDAI) has introduced this new form of car insurance through the regulatory sandbox route. Under usage-based insurance, your insurance premiums are directly linked to your car’s usage. It is a type of short term car insurance plan and suitable for those individuals who infrequently use their car.
How does a usage-based car insurance policy work?
Your insurance company determines a fixed amount of premium depending upon the coverage for kilometres. If you exceed the pre-specified distance, you can additionally renew it too. Although while using a usage-based motor insurance plan, you must note that it will frequently require you to top-up if there is a rise in the use of your vehicle.
What is Telematics?
Telematics is a mix of telecommunications and informatics - it is used to keep track of driving-related data, including storage and transfer of that information. In the auto insurance industry, this data is essential to gain an understanding of driving behaviour and gauge the appropriate vehicle insurance rate.
What are the benefits of usage-based insurance plans?
Affordable premiums: Since usage-based plans are valid for specified duration or distance, the premiums are lower than a standard plan with own-damage cover. Vigilant drivers will be able to save a lot using these types of insurance policies. If you have limited use of your car, this policy can be useful to save premium and get comprehensive coverage when required.
Better road safety: A person’s driving habits can be tracked using telematics devices. Your insurer helps you get these devices installed on your car along with offering coverage for your private car insurance policy. These monitoring tools can be helpful to increase road safety for you as well as for others.
Additional features: You can opt for add-on to pair with your usage-based car insurance policy. These add-ons can help to increase the coverage of your policy as required. Don’t forget to compare car insurance add-ons before finalising on one.
Who should opt for a usage-based car insurance plan?
Usage-based car insurance is not only affordable but also convenient for the coverage it offers. Car owners who do not often drive their vehicles can opt for a usage-based policy. In case you have multiple cars but do not use all of them equally can make good use of such plans. In somecases, individuals prefer to commute to work by public transport but occasionally use their cars for long family trips, can benefit from these usage-based policies.
To conclude, usage-based car insurance has more benefits and can be used by all depending on their need. Affordable car insurance options are available when you make use of a usage-based policy. So make sure you look for these plans at your next purchase or car insurance renewal date.
(Disclaimer: This is branded content. Readers are advised to exercise due diligence and discretion before entering into any correspondence, investment, purchase, business dealings or any other decision on the basis of this content.)