The Rise of “Pay-As-You-Drive” Insurance in India

What is Pay-As-You-Drive (PAYD) Insurance?

PAYD is an approach where the premium for car insurance is tied to how much you drive. Instead of a fixed premium based primarily on vehicle type, age, location, etc., part of your premium (especially own-damage portion) is based on your declared or measured usage—typically kilometres driven per year. If you drive less, you pay less.

There are a few variants: some PAYD plans use odometer readings or photographic/video proof; others may use telematics or “usage” slabs. Some insurers offer add-on covers or “kilometre benefit” options to increase flexibility.

Why Is PAYD Gaining Traction in India?

Several factors are contributing to this rising interest:

Changing Driving Patterns

More people are working hybrid or remote; many vehicles sit idle for long periods. If your car is not used much daily, paying a full fixed premium can feel unfair.

Cost Sensitivity & Value Seeking

Vehicle insurance is mandatory (third-party cover) and many want comprehensive protection but without overpaying. PAYD gives a way to align cost with actual risk.

Regulatory Support & Innovation

Insurance Regulatory and Development Authority of India (IRDAI) has in recent years encouraged innovation, usage-based models, add-ons like kilometre-based covers, etc. The ecosystem of insurers, brokers, and online aggregators makes it easier to compare and adopt such models.

Awareness & Tech Enablers

Digital platforms, apps, better tracking of odometer or telematics, and ease of documentation (video/photo uploads) make PAYD more feasible and less cumbersome.

How PAYD Works in Practice

Here’s a typical flow of how PAYD insurance is purchased and operates:

• Declare Expected Usage: You estimate how many kilometres you will drive in a policy year (e.g. 2,500 km, 5,000 km, etc.).
• Provide Odometer Reading: At purchase you may need to upload a photo or video of the odometer (or sometimes do periodic updates). This ensures the insurer has a baseline.
• Select Add-Ons or Slabs: Choose relevant kilometre slab or tier. Lower slabs = lower premium. Also, select any extra riders (zero depreciation, engine protection etc.) as needed.
• Monitor or Top Up if Needed: If you exceed your declared limit, some plans allow “top-ups” (additional kilometre slabs) or adjust premium. But if you go over without adjustment, your own damage cover may be suspended or co-payment may apply.

Examples from the Indian Market

• Reliance General Insurance offers a Pay-As-You-Drive plan where the own damage premium gets discounted based on the selected annual kilometre limit.
• Platforms like Policybazaar help you compare PAYD options from different insurers and choose kilometre limits that suit your usage.
• Aggregator sites such as InsuranceDekho also list “Kilometre Benefit” or “Pay per km” add-on covers, reflecting the growing availability.

Benefits & Challenges

Benefits:

• Cost Savings: Especially for low-mileage drivers. Less usage = lower own damage portion of premium.
• Fairness & Customization: Your premium reflects your driving behaviour or usage.
• Incentivizes Responsible Driving: If people drive less (or more carefully), risk (and hence costs) for all can reduce.
• Flexibility: With modern platforms and add-ons, you can adjust coverage, top up kilometres, etc.

Challenges:

• Estimating Usage Accurately: If you underestimate usage, you may end up paying more later or needing top-ups.
• Verification & Fraud Risk: Accurate odometer readings, honest declarations matter; otherwise risk of overuse or misreporting.
• Coverage Limits: Once you exceed kilometre limit, some components (like own damage) may lapse, or claims may be subject to co-payment. Customers must read the fine print.
• Availability & Awareness: Not all insurers offer PAYD; many customers may not yet fully understand the model.

How Jio Insurance Broking Fits In

This is where Jio Insurance Broking shines:

• As a broker and aggregator, Jio Insure already helps compare car insurance plans from multiple insurers. For a customer wanting a PAYD model, Jio can help surface the best deals, compare slabs, discounts, and terms.
• Jio’s digital strength and user-friendly interface make it easier for users to understand usage-based options, upload odometer proofs, pick add-ons, and renew or top-up.
• Also, Jio’s tie-ups with multiple reputed insurers mean there is likely good availability of PAYD plans, or at least kilometre benefit options.

Tips if You’re Considering PAYD for Your Car Insurance

Track How Much You Currently Drive

Before switching, check your past driving records or patterns. If you hardly cross 5,000-10,000 km/year, PAYD can be a win.

Choose the Right Slab

If you're close to a limit, overestimating may cost you extra premium. Underestimating may lead to a shortfall or needing to top up. So choose conservatively if unsure.

Read the Policy Fine Print

Especially about what happens if you exceed the declared kilometres, how your own damage coverage is impacted, whether third-party cover remains unaffected, etc.

Keep Documentation Ready

Uploading odometer reading (photo/video), chassis number, etc. Some insurers require verification. Keeping your car’s records tidy can help avoid claim hassles later.

Review Annually

Your driving patterns may change (new job, change in commute, more travel); revisit your insurance plan each year to see if your slab still makes sense.

The Road Ahead

The rise of Pay-As-You-Drive insurance signals a shift in how we think about car insurance in India—from one size fits all, to usage-based, flexible and fair pricing. As more people adopt remote-working, drive less, or want more control over costs, demand for such models is likely to grow.

For Jio Insurance Broking, the opportunity lies in educating customers, simplifying comparison of PAYD options, and helping users pick plans that balance cost with coverage. When done right, PAYD won’t just be a niche offering—it could become a mainstream way of insuring your car.

Pay-As-You-Drive is not just another insurance gimmick. It’s a meaningful innovation that aligns cost with usage, empowers drivers, and can bring real savings—especially for those who don’t use their vehicles heavily. If you're looking for smarter, fairer car insurance, exploring PAYD via platforms like Jio Insurance Broking could be one of the best decisions for your wallet and peace of mind.

If you’re curious to see what savings you could make under PAYD, drop us a line or try out the comparison tools on Jio Insure. Your next premium might just feel a lot lighter.