BHARTI AXA General Insurance to offer ‘pay as you drive’ motor insurance policy

Bharti AXA General Insurance will now offer usage-based motor insurance policies for private car owners under IRDAI's Sandbox project. For this the general insurer has tied up with insurance aggregator, PolicyBazaar.com.

The usage-based motor insurance, also known as ‘pay as you drive’, allows policyholders to pay the premium depending on kilometers driven.

How insurance premium is calculated
According to a press release from the insurer, under this product a customer pre-declares vehicle usage for a period of one year. Accordingly, the insurance premium will be calculated dynamically as per the pre-declared distance in kms. The customer can choose from three slabs - 2,500 kms, 5,000 kms, and 7,500 kms – as per his/her usage.

Sanjeev Srinivasan, MD and CEO, Bharti AXA General Insurance said that the customer has the option to move to a higher slab in the middle of the tenure or make a transition to a standard motor own-damage cover, in case of driving beyond the pre-declared kilometres. "The additional derived premium for both cases will be recovered from the customer. Even if the policy is not renewed in case of breach of kilometers, the liability coverage of the policy would be still valid for the entire duration of the policy. Further, any third party claim arising during the policy tenure would be treated as per existing liability claims practice," he said.

How to purchase ‘Pay As You Drive’ policy
The customer can buy the ‘Pay As You Drive’ product from Policy Bazaar in three simple steps.

• The customer needs to select the plan as per the usage pattern from the three available slabs.
• They need to provide odometer reading, KYC details, and customer consent form, as per regulatory requirement.
• Own damage (OD) premium will be calculated post factoring the premium benefit as per pre-declared slab. The issued policy will have all the coverage under standard motor OD cover for the tenure of one year.

Who should opt for this
Notably, Bharti AXA General Insurance’s proposal for a usage-based motor insurance product was shortlisted by the Insurance Regulatory and Development Authority of India for its regulatory sandbox project. As car usage is highly varied across users, the product benefits those who drive less.

The ‘Pay As You Drive’ is also ideal for those customers who have multiple vehicles and may not use each vehicle as much; therefore, they may not have to pay a large premium amount. It is also useful for those who commute daily via public transport or frequently travel beyond city limits and rarely use their personal vehicle.