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“Pay as you drive” vehicle insurance policy by NIA

Published on February 01, 2023
Current context: New India Assurance has introduced its Pay as You Drive (PAYD) vehicle insurance policy, which charges premiums based on vehicle usage.
“Pay as you drive” vehicle insurance policy by NIA

  • This type of insurance, also known as Usage-based insurance (UBI), pay how you drive (PHYD), and mile-based auto insurance, is determined by factors such as the type of vehicle, time, distance, behaviour, and location.
  • The PAYD policy offers discounts on renewals, coverage beyond distance limits, and additional protection features like zero depreciation, roadside assistance, engine protection, and return to invoice.
  • Insurance premiums are calculated based on driving, and distance traveled instead of a fixed amount in traditional car insurance.
  • This model benefits those who use their vehicles sparingly. The policy includes a third-party cover and own-damage cover.
  • Customers can save money on own-damage premiums through renewal discounts if the vehicle is driven within specified kilometres.
  • Recently, the Insurance Regulatory and Development Authority of India has permitted insurance companies to launch telematics-based motor insurance covers such as PAYD and PHYD, allowing vehicle owners to pay for insurance based on usage.


Q1. Who releases the “pay as you drive vehicle” insurance policy
a. SBI
b. NIA
c. Bajaj excel
d. NSE

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