Indian insurance companies are launching innovative, new products that allow you to pay by usage
By Prashant Deorah
Since March 2020, India’s roads are nearly empty of cars because people aren’t driving as much or at all. The COVID-19 pandemic has led people to stay indoors and stay safe. With cities being turned into containment zones, weekend road trips are now restricted to a 2-km radius. You would be lucky if you have clocked more than 100 kms in the last couple of months.
Now think about this for a moment. You have a car you aren’t able to use it at all. But you are still paying an insurance premium on it. Let’s assume you pay an annual insurance of Rs. 12,000. That works out to Rs 1000 a month. If you don’t use your car for two months, that’s Rs 2000 worth of insurance.
Have you ever considered buying a car insurance based on your usage rather than for a year or two years? If you have, then you are in luck. Indian insurance companies are launching innovative, new products that allow you to pay by usage. One such example is Liberty General Insurance’s just launched ‘Pay For The Distance’ product.
The ‘Pay For The Distance’ policy is part of a pilot that the insurance regulator IRDAI has allowed a few companies to undertake to encourage innovation in the industry.
“Not everyone uses their car the same way. Some may clock 50-60 kms a day because they take their cars on long commutes. Others may just take their cars out on weekends for short drives. But both pay the same premium,” says Sriram Naganathan, president – Operation and Services. “Internationally, usage-based car insurance is popular. As a leader in the segment and a company known for its innovative products, we decided it was time to bring the concept to India.”
LGI’s product is part of its comprehensive Own Damage cover, and you can choose a distance slab (based on KM) that works for you. What happens if you complete the distance mid-year? “Much like a prepaid mobile phone connection, if you exhaust the kilometres, you can top it up with more kilometres,” says Sriram. “Pay for the distance insurance is certainly an idea whose time has come,” he adds.
Going by the catchy tagline #DriveLessPayLess, the other features of this product fit right in with specific insurance objectives. Apart from pay-per-distance and easy top-up, you have access to no-fault protection, additional voluntary deductible options and roadside assistance.
Heena Attarwala, a nutritionist and a compulsive road trip enthusiast agrees. “I’m not a fan of driving in traffic, which is why I use my car only on weekends or for micro-cations. I would love to go for a car insurance premium option that is based on usage because I will certainly be able to save a few thousand rupees.”
Frequent flier Kaustubh Sethi gives a different perspective on wanting to opt for a usage-based product. “My business requires extensive flight travel, and I’m hardly ever at home for more than a month. We have a car that my wife uses for dropping kids off to school and her grocery shopping. Overall, my vehicle’s monthly average is barely 100 km. Now, with our country in lockdown, we have been indoors for more than a month! Since February 2020, I have used my vehicle for about 10 km on average. I would be interested in switching to a smart policy that has an affordable premium and doesn’t compromise on other insurance benefits.”
That’s exactly what LGI’s Pay For the Distance car insurance does. It allows you to choose a usage-based product without compromising on any of the other features that car owners need from an insurance policy.
The author is managing director and CEO, Puretech Digital