Pay As You Drive (PAYD) Car Insurance in India: A Game-Changer for Low Mileage Drivers

Indian auto insurance is in a state of rapid transformation. New technologies, altered driving styles, and consumers’ expectations are forcing insurers to reconsider conventional methods. One of the innovations they’re embracing is Pay As You Drive (PAYD) motor insurance — one that’s particularly well-suited to low-mileage drivers.
So what exactly is PAYD insurance, and how does it function in India, and why is it called a game-changer? Dive in with me.

What is Pay As You Drive (PAYD) Insurance?

In plain language, Pay As You Drive insurance bills you according to how much you actually use your vehicle. Contrary to the usual policies where you pay a fixed premium regardless of usage, PAYD policies tie your premium to the mileage.

The less you drive, the less you pay.
This model suits individuals who:
● Occasionally use their car
● Work from home or hybrid
● Have more than one vehicle
● Use public transport for daily commutes

How Does PAYD Car Insurance Work in India?

Following the sanction of innovative add-on covers by the Insurance Regulatory and Development Authority of India (IRDAI) in 2022, several leading insurers started providing PAYD products.

Here’s an illustrative sequence:

1. Initial Estimation: During the purchase of insurance, you specify your estimated annual driving distance (e.g., 5,000 km or 10,000 km).

2. Policy Pricing: Your premium is charged as per the bracket of distance that you choose.

3. Monitoring: The insurer can monitor your mileage by:

● Odometer readings (during the course of inspections)

● Telematics devices

● Mobile applications linked to your car

4. Adjustments: In case you drive more than the declared kilometres, certain insurers permit you to supplement your coverage by paying an extra premium.

Why is PAYD Insurance a Game-Changer for Low Mileage Drivers?

1. Save Money If you drive little, traditional insurance makes you pay too much. PAYD turns that on its head — rewarding prudent, low-usage drivers with big discounts on premiums.

2. Customization PAYD policies introduce car insurance personalization. Rather than a one-size-fits-all policy, your policy is tailored to your lifestyle.

3. Encourages Responsible Driving With the knowledge that their driving is being monitored, drivers naturally drive more prudently. This minimizes accident risks and claims for insurers, which benefits all.

4. Environmentally Friendly Less driving = less pollution. PAYD aligns with the overall vision of sustainability, encouraging drivers to drive cars responsibly.

5. Well Adapted for Urban India In cities such as Mumbai, Delhi, and Bengaluru where traffic jams deter day-to-day driving, PAYD naturally adapts to urban car-owning patterns.

Who Should Consider PAYD Insurance?

Whereas all are free to choose PAYD, it is especially useful for:

● Home-based workers

● Older persons who drive infrequently

● Second car households

● Weekend-only drivers

● Occasional-use car-driving students

If you are under 10,000 km annual use, a change to PAYD may reduce your insurance bill significantly.

Which Insurers Are Offering PAYD Plans in India?

Some of the most popular insurance providers that provide PAYD policies (as of 2025) are:

● HDFC ERGO

● ICICI Lombard

● Bajaj Allianz

● New India Assurance

● Tata AIG

● Bharti AXA

(Disclaimer: Availability and terms can change. Always consult your insurance advisor — such as Ginteja — to get the best PAYD policy for you.)

What are the Challenges of PAYD in India?

Although the idea is thrilling, there are some practical issues that need to be addressed:

● Concerns over data privacy: Customers are not ready for GPS monitoring or telematics devices divulging their driving habits.

● Non-reliable Odometer Recording: Manual reads can at times result in discrepancies if mileage gets recorded inaccurately.

● Top-Up Inconvenience: If one underestimates mileage, topping up halfway would be a wee bit inconvenient.

● Limited Awareness: Most Indian motorists are still not aware that PAYD exists and how much money they can save.

Yet, as knowledge increases and technology becomes better, these challenges are bound to diminish.

How to Choose the Right PAYD Insurance Plan?

Before choosing a PAYD policy, follow these steps:

● Check Your Yearly Kilometres: View last year’s odometer reads.

● Compare Insurance Plans: Few insurers provide a better mileage blocks or more flexibility.

● Read Terms Carefully: Understand what will happen in case you go over the limit of distance.

● Seek Help from an Expert: At Ginteja, we assist in comparing PAYD policies across a variety of insurers — so that you choose one that actually meets your requirements.

Future of PAYD in India

PAYD is only the start. Insurers are also looking into:

● Pay How You Drive (PHYD): Where premiums are based on your driving behavior — speed, braking, cornering tendencies.

● Behavior-Based Discounts: Good driving might reward you with loyalty discounts and incentives.

In a nation where customer expectations, technology, and urbanization are going through the roof, usage-based insurance models such as PAYD are sure to increase at a faster rate in the years ahead.

Final Thoughts –

If you’re not one who travels thousands of kilometres each month, Pay As You Drive car insurance may be the wisest fiscal choice you make this year.

You’ll not just save money, but also relish a policy that’s according to your actual driving behaviour.

At Ginteja, we assist you in comparing PAYD and ordinary plans — that you drive protected, save extra, and remain hassle-free.

Considering making a switch to PAYD?

Call Ginteja today and let’s discover the ideal policy for you!