Auto Insurance rules to get change: Vehicle usage, driving behaviour to determine premium

7 Jul 2022 , 01:58 PM

Insurance Regulatory and Development Authority of India (IRDAI) on Wednesday has allowed general insurance companies to introduce tech-enabled concepts of “pay as you drive” and “pay how you drive” for “own damage (OD) cover”.

Also, vehicle owners can now buy cheaper insurance policies based on their driving behaviour, general upkeep of vehicle, mileage and usage pattern, the regulator said in a recent notification.

With a view keeping pace with new developments in the market, especially involving the use of technology, and in order to provide more options for policyholders, IRDAI permits general insurance to introduce the following concepts for the Motor Own Damage (OD) cover through the filing of appropriate add-ons to the basic OD policy on an annual basis:

• Pay as You drive
• Pay How You drive
• Floater policy for vehicles belonging to the same individual owner for two wheelers and private cars.

Following the policies, as the name suggests, ‘Pay as you drive” will allow the users to pay for the insurance as per the usage. Similarly, ‘Pay how you drive’ will depend on the driving behaviour of the owner and similar to floater health insurance policy, ‘floater policy’ for vehicles will allow individuals who own more than one vehicle, two-wheeler or car- to opt for single motor insurance which will cover all their vehicles.

According to the notification, the said options will aid in giving the much needed fillip to Motor Own Damage Insurance and increase its penetration.