The Insurance Regulatory and Development Authority of India (IRDAI) has now allowed general insurance companies to offer Pay As You Drive and Pay How You Drive policies based on the driving history of car owners.
Insurers can also introduce a floating policy as a supplement for those who have more than one vehicle or two-wheeler.
IRDAI’s decision will make auto insurance more affordable and increase the penetration of auto insurance in the market. Car owners can now opt for insurance coverage based on the number of miles driven with their vehicle.
New technology-enabled auto insurance policies can be covered as add-ons to basic personal damage (OD) coverages. “The introduction of the options will help give the much-needed boost to OD motor insurance in the country and increase its penetration,” IRDAI said in a press release.
Every car owner has different driving needs. New add-ons with existing OD covers will provide more choices for vehicle owners.
Car owners can now choose insurance policies based on their driving style, vehicle usage and mileage. However, details of new auto insurance policies may vary by insurer.
Those who own vehicles with lower mileage can get more options to choose insurance policies based on their driving needs.
The car insurance premium will be determined based on the driving needs of the owner, and those who use vehicles less frequently may benefit.
Car owners don’t have the same level of vehicle usage requirement, and now the new add-ons will help remove a standard premium for all practices. Those who maintain a good driving record can benefit from IRDAI’s latest ruling.
A few industry insiders have raised concerns that IRDAI’s decision would eliminate the cross-subsidies currently enjoyed by high-consumption customers.