By Nitin Kumar
Motor insurance is now becoming more personalised, flexible and aligned closely with individual customer needs. What used to be a straightforward, necessary purchase is now more dynamic and customer-focused. Driven by regulatory reforms and digital tools, the motor insurance industry is seamlessly integrating data and analytics to offer products more relevant to new-age consumers.
The insurance regulator’s recent initiative to make the The ‘Pay as you drive’ (PAYD) option as the first choice to be offered to consumers while buying a policy validates the evolution in the motor insurance landscape. Not just this, the increased emphasis on comprehensive coverage is another landmark for the industry.
Here’s an overview of what vehicle owners should look for while buying motor insurance.
Comprehensive coverage
When a vehicle is involved in an accident, the law requires third-party insurance to cover damages caused to others by the policyholder’s vehicle. However, this does not offer complete protection, leading many vehicle owners to opt for comprehensive insurance policies that also cover their own damages.
New car owners are required to purchase a one-year comprehensive policy along with a three-year third-party cover, while for the second and third years, they are only required to have a standalone own damage insurance policy. However, even after this period, one must continue to have comprehensive coverage.
Pay-as-you-drive
More than one in three customers now choose PAYD plans, and with a high 75% renewal rate, it’s clear that these plans resonate well with policyholders. It benefits those who drive less frequently, such as remote workers, retirees or individuals who rely on public transport for their daily commute. The insurance premium is calculated using telematics devices that track the distance. It not only makes motor insurance more affordable but also encourages responsible driving habits, as lower mileage can result in significant cost savings. They often come with the flexibility to adjust coverage as driving patterns change, providing a level of customisation that was previously unavailable.
Add-ons for enhanced protection
Add-ons can significantly enhance the coverage provided by standard policies for a slightly added premium.
Zero depreciation cover: This ensures that the policyholder receives the full claim amount without any deduction for depreciation on the value of parts being replaced. This is advantageous for new car owners, as it covers the damage repair cost and replacements at current market prices.
Engine protection cover: This covers the cost of repairing or replacing the engine, and its parts in case of water ingress damage, lubricating oil leakage or other mechanical issues not covered under standard policies. It is especially useful for those living in flood-prone areas or regions with extreme weather conditions.
(The writer is head, motor insurance, Policybazaar.com. Views expressed are personal)
