How and how often you drive to determine your car insurance premium soon

To facilitate technology (tech) based insurance covers, the Insurance Regulatory and Development Authority of India (Irdai) has allowed general insurance companies to introduce concepts such as ‘pay as you drive’, ‘pay how you drive” and floating fonts for vehicles. owned by the same individual owner of two-wheelers and passenger cars as top-ups in Vehicle Damage (OD) policies.

With these add-ons, the engine OD policy can be customized, based on customers’ driving habits, vehicle usage and other parameters to deliver the best functionality. These should provide insurers with better pricing metrics, helping them to differentiate good drivers from not so good, impacting premiums accordingly.

Previously, there was no mechanism to distinguish between different classes of drivers, but now they can be distinguished and customers who really deserve a higher discount will be rewarded appropriately. This should also make OD covers more affordable, given that most people opt for third party liability (TP) covers because they are mandatory.

Sanjay Datta, Head of Underwriting and Claims, ICICI Lombard General Insurance, said: “This will help insurers by providing them with better pricing metrics that will be driver-based and not asset-based. The rating parameters will help characterize good and bad drivers, based on their driving behavior, which will allow good drivers to get a discount and less good ones to get higher bonuses. These additions will benefit policyholders who drive carefully or sparingly.

The concept of “pay as you drive” stems from the fact that policyholders will be billed premiums based on the use of the vehicle.

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Similarly, “pay how you drive” follows the concept of customers paying rewards based on their driving standards.

In addition, floating policies for sole proprietors of two-wheelers and passenger cars aim to reduce the inconvenience for vehicle owners, so that they do not have to take out separate policies for all their vehicles.

Irdai’s auto insurance top-up circular is primarily a usage-based cover as an add-on to an OD policy that provides additional protection to customers based on their driving pattern and those with a frequency reduced vehicle usage, said TA Ramalingam, Technical Manager, Bajaj Allianz General Insurance.

“The goal of these covers is to make car insurance more affordable, especially for customers who primarily opt for TP-only covers and overlook the benefits of OD covers,” he added.

Rakesh Jain, CEO of Reliance General Insurance, said: “This will remove the standard practice of premium for all and allow customers to earn a premium based on usage and consumption. Artificial intelligence and data analytics will play a major role and help insurers keep up with trends, increasing product innovation. Additionally, the new ruling will encourage people to take care of their vehicles, follow traffic rules and maintain good driving habits.

Concepts such as “pay as you drive” and “pay how you drive” in car insurance are very popular in other markets, although they have yet to take off in India, said Subramanyam Brahmajosyula , Head of Underwriting and Reinsurance, SBI General Insurance.

“With the regulator now taking a proactive step to encourage insurance companies to file these add-ons, customers will benefit as it will bring an element of personalization and flexibility to car insurance, as well as the ability to reduce premiums” , did he declare. said.


  • Own damage policy can now be customized, depending on driving mode and vehicle usage
  • This will remove the standard practice of bounty for all
  • Car insurance coverages will also become more affordable now
  • Insurers will have better pricing parameters – they will be based on drivers, not assets
  • This will help them differentiate good drivers from bad ones based on driving behavior
  • Good drivers can get a discount; poorer ones may have to pay higher premiums

According to the insurance regulator, the concept of car insurance is constantly evolving. The advent of technology has created a relentless pace for the insurance fraternity to meet the interesting yet challenging demands of millennials. The P&C insurance industry must keep pace and adapt to the changing needs of policyholders. The introduction of such add-on options will help give the much needed boost to OD car insurance in the country and increase its penetration.

“Pay as you drive” includes covers where insurance costs may depend not only on the distance traveled, but also on how, where and when we drive. The way we drive can also help us significantly reduce our car insurance costs.

“Pay how you drive” monitors a few factors (time of day, speed, acceleration and braking) to capture our driving habits over a short defined period.

“These characteristics rank us to produce a score to apply to our premium rates,” said Sharad Mathur, managing director and CEO of Universal Sompo General Insurance.

Currently, car insurance coverage is of two types: all-risk insurance and TP civil liability insurance. A comprehensive auto insurance plan includes TP liability, as well as OD coverage, which covers all expenses incurred by the insured due to theft or accident of the vehicle.

The advantage of purchasing a comprehensive car insurance policy is that supplemental plans or endorsements extend the additional benefits to the policyholder without taking out multiple policies. TP civil liability insurance is required by law for each vehicle owner. It protects the interests of the insured against damage caused to property or to an individual by the insured.

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