Hyderabad: The Covid-19 has forced a change in the way we travel making it mostly need-based travel and additional travel is being avoided wherever possible. In view of this, the insurance sector is also seeing changes to cope with the falling automotive sales and are devising products that are in sync with the changing travel scenario.
Among others, they are bringing usage-based insurance (UBI) private car policies for car owners, launched under the IRDAI’s Regulatory Sandbox. These are affordable and offer customised solutions that match with the driving profile. These policies include propositions like depreciation reimbursement, daily allowance, no claim bonus protection cover and others, according to Sajja Praveen Chowdary, motor business head, Policybazaar.com.
These policies allow users to pay premium proportionate to the distance they drive. This serves two purposes — it reduces premium for users and second it continues to offer the cover. High premiums are among the reasons for many people to not renew their insurance, he said. Now, there are limited options for car users — either they take a comprehensive policy or opt for a third party cover. In either case, the current policies do not distinguish between those driving long distances, which increases the risk, and those doing limited distances, say between home and office and an occasional long drive.
For the new policies, customers can choose premium for 2,500 km, 5,000 km, 7,500 km, 10,000 km and so on. If they are nearing the end of the range, they will have to go for top-up kilometer, in multiples of 500 km. This will ensure that the benefits are not disrupted. However, if the travel exceeds the kilometer range and no top-up is done, only third party damages will be paid and own damage claims will not be honoured, he said.
“Pay-as-you-drive insurance policies will be the future as one size does not fit all,” he said. Then there are some insurance products that allow users to on-off the premium. The accidental cover is charged per day basis. This is useful for cities like Mumbai and others where the use of local trains is huge. As a result, on most days car is not used. The new policies allow users to pay premiums through an app only when they travel. “In terms of cost, tailor-made policies are cheaper by 20-25 percent compared to conventional policies. These will be preferred as the travel landscape has changed. The insurance cover value decreases with age, like in all policies,” said Chowdary.
TATA AIG General Insurance Company Limited had last month launched AutoSafe app which helps policyholders pay premiums based on the kilometers they drive. It works as an anti-theft device as it comes with a GPS-based tracking facility. This app tracks distance travelled by the vehicle, live speed and other driving parameters. It offers bonus kilometers for good driving behavior at the time of the renewal.