In traditional Motor Insurance, coverage is given to a vehicle for compulsory Third Party (TP) liability as well as for optional Own Damage (OD) to the vehicle if the vehicle gets involved in any accident. The owner driver also gets Personal Accident (PA) coverage to cover bodily injury, disability or death. Optional cover may also be taken for hired drivers, if any, and for passengers.
Under this, a particular vehicle gets insurance cover and premium is paid for a specified period depending on age, make and model of the vehicle, even if it is not used for most of the coverage period.
On the other hand, a driver-based insurance is like a floater policy that covers multiple drivers and multiple vehicles under a single policy and that too on pay-as-you-use model that allows the customer to pay premium only on the days they use the vehicle.
Under the Insurance Regulatory and Development Authority of India’s (IRDAI’s) Regulatory Sandbox, such an innovative app-based Motor OD floater policy has been launched by Edelweiss General Insurance (EGI), named Edelweiss SWITCH.
This driver-based motor insurance policy not only allows vehicle owners to switch their motor insurance ON and OFF based on usage, but also covers multiple vehicles under a single policy.
Unlike a traditional Motor OD policy, insurance premium for Edelweiss SWITCH is calculated on the age and experience of the driver.
Moreover, it offers significant cost savings and convenience to customers, as they may pay the premium only on the days they use the vehicle as per the pay-as-you-use model of Edelweiss SWITCH.
Although, accidental damage claim may be admitted under the policy only when it is switched on, cover against fire and theft is provided 24/7/365 as these incidents can happen even if the vehicle is not being driven.
The “Pay as you use” model is expected to bring in a change in the standard of determining Motor Insurance premium, as usage and driving experience would also be taken into account henceforth.