Car Policy Premium Based on Your Driving Behavior – Know in Detail

Does Your Driving Behavior Also Affect the Premium of Your Car Policy?

Do you know that your car insurer can charge you a premium depending on your driving performance? If not, read on to know how your driving skills can influence your car insurance policy premium in this post.

As per IRDA or Insurance Regulatory and Development Authority of India, vehicle insurance companies can now charge policyholders a premium as per their driving behavior. IRDA has facilitated insurance providers to initiate concepts based on technology that consider vehicle owner’s driving behavior as one of the parameters to fix premiums.

This new rule is known as ‘pay as you drive’ or ‘pay how you drive’ model and vehicle insurers can charge premium to policyholders as per this new concept. So, now the car driving skills of people will play an important role in deciding the premium that they would pay towards their auto insurance. This new concept has been introduced by IRDA recently.

Further, IRDA has also permitted insurance companies to provide floater policies to people who own more than one vehicle. The floater policy can be availed as an add-on cover based on the driving skills of the owner.  This usage based insurance is also likely to make auto insurance inexpensive and more affordable. Policyholders who are interested in availing the new plans can switch at the time of car insurance policy renewal.

3 New Kinds of Auto Insurance Covers

1. Pay as You Drive Insurance Policy

‘Pay as you drive’ is a policy that enables car owners to  make payment for their car insurance policy as per their usage. In this case, the vehicle owner has to state about his/her planned usage in advance. Depending on the declaration of the usage or how much distance they are going to cover, the insurer tracks the usage via a geo-tagging system to tag the car with the various media.  Further, in this case the insurance company clarifies the claim process if the policyholder exceeds the usage than what is declared while buying the policy.

2. Pay How You Drive Insurance Policy

‘Pay how you drive’ is another newly introduced concept of car insurance policy, which is dependent on the way the insured drives his/her car. Here, the policyholder has the option to live-track their driving skill as per the speed limit, the usage  as well as other parameters. Similarly, the insurer also settles on how much premium to charge as per the same parameters.

3. Floater Policy for Those Who Possess More Than One Vehicle

This is an add-on cover that vehicle owners having two or more cars and bikes can buy with their regular policy. Under this coverage, the insured can avail protection against all the vehicles that the person possesses including two-wheeler and four-wheeler. IRDAI introduced these new policies because of the evolving concepts of auto insurance.

Read More: How Does Car Financing Affect Your Car Insurance?

What Could Attract a High Car Insurance Premium?

IRDAI suggests that rash driving of policyholders is one of the factors that can attract high premiums if you are availing the benefits of these newly launched best car insurance policies. This is because the driving behavior of vehicle owners would be monitored through global positioning systems under these policies.

So, policyholders will have a small device fitted in their vehicles that will help the insurance company to track the information of the driving details of the vehicle owner. Further, the insurer will use technology to generate a driving score to help them determine the premium.

To Conclude

There have been tremendous changes in terms of technology as seen over the years. This has created a huge space for adapting to new and interesting challenges for the insurance sector as well so that it can offer the best to meet the constant and rising demands of the millenials. Moreover, like all other areas, the area of general insurance also needs to keep pace to the evolving needs of time to meet policyholder’s demands. The newly added policies and the add-on covers are in a way going to offer varied choices to the auto owners.

Whatever plan you may buy, it is important to compare car insurance policy premiums by looking for different policies by different insurers.  Here, you can use a car insurance policy premium calculator to calculate the amount of premium you may be paying.

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