With the change in driving behaviour over time, sticking to the same conventional motor insurance is unjust to the disciplined and skilled driver. In addition, those who don’t drive their car often may hate paying the same amount towards insurance premiums as other car drivers. Considering such scenarios, four-wheeler insurance providers are now coming up with a personalised product known as telematics car insurance and here’s everything you need to know about it.
What is usage-based motor insurance?
Usage-based motor insurance or telematics four-wheeler insurance is a policy whose premium is directly associated with the usage of an insured car. Insurers analyse your driving behaviour and prepare data accordingly through an installed tracker or telematics devices. Depending upon that data, they develop a personalised insurance policy for your vehicle.
How does telematics four-wheeler insurance work?
In motor insurance, the policy premium is based on the risk associated with your profile. When you opt for usage-based car insurance, you need to first install a telematics device in your car. The insurer using this device notes down the data such as your average speed, number of kilometres you have driven the car, your driving routes, driving behaviour, and more. Insurers may also record data related to braking and acceleration patterns. After analysing the available data, the insurer decides your four-wheeler insurance premium.
How can one report their driving stats under telematics motor insurance?
Unlike conventional car insurance, you don’t have to fill any manual or online form to share your details. The telematics data generation process is automatic. Here are some ways to report your driving to the insurer under usage-based insurance.
- Mobile app
You can report your driving by installing certain mobile apps and changing your settings after installation. Check with your insurer to see which app you will need to install.
- Plug-in device
The insurer may want you to plug in a tracker device the same way you connect a pen drive or charging wire to your car’s infotainment system. The tracker keeps track of factors such as acceleration and braking patterns, distance travelled, and more.
- GPS devices
An advanced GPS device may also assist you in sharing your driving information with your four-wheeler insurance provider.
- Other devices
You may also install onboard sensors, mileage detection devices etc., to share real-time driving data with your motor insurance provider.
Advantages of telematics car insurance
Are you looking for a four-wheeler insurance provider that offers a customised insurance product? If yes, telematics car insurance may be able to assist you. Such type of car insurance comes with numerous benefits such as:
- You can work on your weak points and become a more skilled driver when you have data about your driving behaviour.
- Skilled driving reduces the likelihood of an accident, lowering the cost of your four-wheeler insurance.
- If you don’t drive your car often, you will have to pay a much lower premium than conventional motor insurance policies.
- With telematics, motor insurance providers have precise data about customers’ driving behaviour using which they can offer value-driven and improved customer-specific insurance products.
Different types of usage-based four-wheeler insurance
Some of the common usage-based four-wheeler insurance policies are:
- Pay As You Drive (PAYD):
If you opt for a PAYD usage-based motor insurance policy, the amount of premium you are required to pay is determined by the amount of driving you do.
- Pay How You Drive (PHYD):
The premium applicable to this type of usage-based four-wheeler insurance is determined based on your driving behaviour. Under PHYD insurance, the more skilfully you drive, the less you will have to pay for your motor insurance.
- Pay As You Go (PAYG):
To obtain this four-wheeler insurance policy, you must first install a telematics device in your vehicle. Depending upon the insurer, this type of usage-based policy may include features from all usage-based car insurance policies mentioned above.
- Distance-based insurance
This type of usage-based four-wheeler insurance is also known as Pay Per Mile motor insurance. The higher the number of kilometres driven, the higher will be your premium and vice versa.
Conventional car insurance vs usage-based car insurance: Key differences
Based on the offerings under usage-based motor insurance packages, you might have drawn a clear line between conventional and telematics four-wheeler insurance. For an overview, look at the differences mentioned in the table below.
|Conventional motor insurance||Usage-based motor insurance|
|It does not come in a customised form.||This type of policy is available in a personalised form.|
|You don’t need to install any device in your car to obtain this policy.||Installation of telematics or tracker devices in your car is mandatory to obtain this policy.|
|The scope for growth of such policies is very limited in India.||Such policies have immense growth potential.|
Usage-based motor insurance is yet to gain popularity in India. This form of four-wheeler insurance will not only assist drivers in improving their driving skills but will also assist insurers in offering better products at lower costs. So, until your chosen insurer offers such a package, drive safely, earn a high No Claim Bonus in car insurance, and save money on your conventional four-wheeler insurance.