Motor insurance riders: All you need to know for a smooth ride

Technology has transformed the way insurance works; the driving habits of policyholders can now be tapped and used to customise plans accordingly.

July 20, 2022 / 06:39 AM IST

What does one get for being a good driver? Safety, a clear conscience, and peace of mind would top the list. There are car owners out there who follow every good driving practice diligently.

Every once in a while, they crave for a little bit of an extra bonus as responsible car owners. What if we told you that you may finally be getting some big brownie points for driving responsibly or less frequently? The Insurance Regulatory and Development Authority of India (IRDAI) has announced some very exciting add-ons to car insurance policies.

In the past decade and a half, technology has transformed the way insurance works. The IRDAI has been ensuring that every insurer in the country keeps up with this transformation. Three new motor insurance riders have also been introduced in the same bid. The regulator said, “Introduction of the above options will aid in giving the much-needed fillip to Motor Own Damage cover in the country and increase its penetration.”


Here is everything you need to know about the new riders:
Pay as you drive 


In the post-pandemic world, even everyday travel has become more dispensable than it was in the past. Even going to office or supermarket has found reasonably good alternatives. As a result, there is a large chunk of car owners who do not drive their cars very regularly. Traditionally, these car owners would be required to pay premiums on their motor policies irrespective of their driving habits.


The recent IRDAI announcement has introduced a more nuanced approach to a policyholder’s premium payment requirements. The pay-as-you-drive model is an optional rider based on the number of kilometres or distance driven. So, one pays a premium as per usage instead of having to abide by a flat rate for all. This is especially useful for those who work from home or who have more than one car.
Pay how you drive 


Your driving habits can reveal a lot about your insurance needs, a responsible driver is likely to be at a lower risk of being in an accident. Traditionally, there was no system in place that would understand and incorporate this likelihood in a policy. The 'Pay How You Drive' model, recently approved by the regulator, is set to revolutionalise this aspect of insurance.

Thanks to the influx of technology, the driving habits of a policyholder can now be tapped and used to customise his or her plan accordingly. This means that a person with a proven track record of following driving rules is likely to incur lower premiums than usual. Respecting traffic signals, driving at the recommended speed, and in your stipulated lane can finally benefit you in more ways than one. This is typically calculated using the GPS tracker in your vehicle. There are algorithms at the backend that recommend the right premium for individual drivers.

The beauty of this rider is that it not only gives a car owner a fair deal, but it also encourages other drivers to respect rules and regulations.

Floater policies

If you own more than one vehicle, it may be tedious for you to have to manage separate insurance policies for each of them. Moreover, you are bound to pay a higher premium than others as you have to maintain two or more mutually exclusive insurance policies. An ingenious solution to this is a floater policy. This allows one to buy one combined policy for multiple vehicles.

It helps a policyholder in paying a lower premium and also to extend policy benefits to multiple vehicles. This optional add-on can even include two-wheelers. Moreover, the benefits of one’s good driving behaviour can simply be carried forward from one vehicle to another, saving time and effort for the policyholder.

All in all, these latest regulations by the IRDAI pave a very interesting path for motor insurance in India. These show that technology has allowed the insurance industry to embrace finer details of customers’ needs and offer products that give the policyholder a fairer deal.
Ashwini Dubey , Head-Motor Renewals, Policybazaar.com
first published: Jul 19, 2022 09:30 am
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