About Pay as you Driver Policy
In 2026, Pay As You Drive (PAYD) is a widely available usage-based motor insurance policy in India that calculates premiums based on the actual distance your vehicle travels. Authorized by the IRDAI, this policy is particularly cost-effective for low-mileage users, such as those who work from home or use public transport.
How it Works
Pay As You Drive policies calculate your premium based on your annual vehicle usage, making insurance smarter, flexible, and more cost-efficient for low-mileage drivers.
Mileage Slabs
You choose a distance "slab" (e.g., up to 2,500 km, 5,000 km, or 10,000 km) based on your estimated annual usage.
Tracking Methods
Insurers track usage via telematics devices (GPS-enabled gadgets in the car), smartphone apps, or simple odometer reading declarations at the start and end of the policy.
Top-Up Option
If you exceed your chosen slab, you can "top-up" by paying an additional premium to maintain continuous coverage.
Carry Forward
Some insurers allow you to carry forward unused kilometers to the next policy year if you renew with them.
Key Features and Inclusions
Pay As You Drive insurance combines affordable premiums with comprehensive protection and flexible add-on options for a smarter driving experience.
Discounted Premiums
High discounts (up to 85–90%) are often available on the Own Damage (OD) portion of the premium for low-usage slabs.
Comprehensive Coverage
It provides the same protection as standard policies, including third-party liability, fire, theft, and natural disasters.
Add-on Options
You can still include riders like Zero Depreciation, Engine Protection, and Roadside Assistance.
Major Exclusions & Penalties
Understanding these exclusions and penalties helps ensure uninterrupted protection and prevents claim-related complications under a Pay As You Drive Policy.
Exceeding Limits
If an accident occurs after you have exhausted your kilometer slab without a top-up, the claim may be rejected or subject to a high co-payment.
Odometer Tampering
Any evidence of tampering with the odometer or telematics device can lead to immediate policy cancellation.
Standard Motor Exclusions
Driving without a license, under the influence of alcohol, or outside specified geographical limits remains excluded.
Stay Within Your Coverage Limits
Regularly monitor your vehicle usage, maintain accurate mileage records, and purchase a top-up whenever required to ensure uninterrupted protection and smooth claim settlement throughout your policy period.