Do a lot of research before opting for your car insurance.
Motor insurance in India is mandatory for all vehicles driven on public roads.
‘Pay As You Drive’ plans are becoming increasingly popular across tiers in India. As one of the top trends, it is seen that more than 1 in 3 customers opt for PAYD, while 3 in 4 renew them, indicating a shift towards personalised motor insurance coverage, Policybazaar said in the latest assessment.
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Motor insurance in India is mandatory for all vehicles driven on public roads. It financially protects you in case of unforeseen events like accidents, theft, or natural disasters. There are two main types of car insurance available in India:
- Third-party Liability Insurance: This is the most basic and mandatory type of car insurance. It covers any injury or damage caused to a third party (people or property) by your vehicle in an accident.
- Comprehensive Car Insurance (Package Policy): This policy offers more extensive coverage than third-party liability insurance. It covers damage to your car in addition to third-party liabilities. It can also include add-on covers like personal accident cover for drivers and passengers, engine protection, and roadside assistance.
Policybazaar data analysis for policies sold on its platform in FY24 revealed that out of the total customers buying car/motor insurance when offered 30-50% are opting for PAYD.
Other key findings;
- Encouragingly, 3 in 4 customers have chosen to renew their PAYD policies, underscoring satisfaction and confidence in this innovative insurance approach.
- Comparing the current quarter to the previous, there has been a staggering 45% growth in PAYD bookings, revealing the increasing appeal of these flexible plans.
- 10-15% of policyholders have opted for top-up services to extend their distance slab limit for their PAYD plans, indicating a growing interest in customising coverage to suit individual needs.
- The top make-models contributing to 65% of PAYD bookings include popular vehicles such as Maruti Baleno, Swift, and Hyundai i20, highlighting a diverse customer base.
- FY24’s top PAYD bookings were for Hatchbacks (50%), followed by SUVs (30%) and Sedans (18%).
- Top reasons for choosing PAYD plans:
-Limited usage of their cars for short-distance travel (60-70%)
-Second car owners or have multiple cars (15-25%)
-Remote work arrangements (10-15%)
- Interestingly, the share of PAYD in comprehensive bookings remains consistent at 34-35% across Tier-1, Tier-2, and Tier-3 cities, reflecting a widespread adoption regardless of geographic location.
- A significant portion (65%) of PAYD bookings in Tier 2 and Tier 3 cities originate from states like Uttar Pradesh, Jharkhand, Telangana, and others, showcasing a nationwide embrace of this innovative insurance model.
- Among different slabs in PAYD plans, the 5000-6000 KM option emerges as the most popular, chosen by 45% of policyholders, followed by 2000-4000 KM (20%) , 8000-10000 KM (20%) and 6000-8000 KM (15%).
