Soon, the car owners may soon have an option to buy insurance cover in proportion to the distance they travel.
Insurance companies have come out with this model, called ‘pay as you go' insurance. Data will be monitored through GPS device installed in the vehicles.
"The basic idea is to charge a minimum premium, say Rs 1,000, which can cover 30 days of driving. Instead of paying the entire year's premium in advance, the policyholder can pay according to his usage. If the usage is less, the remaining amount can be refunded," said Mr. K. G. Krishnamoorthy Rao, Managing Director and Chief Executive Officer, Future Generali Insurance.
The GPS device will gather data based on the mileage and the roads on which the car is plying. The insurance company will price the cover based on each of these parameters.
Future Generali is the first company to run a pilot insurance in partnership with Logica, a UK-based IT company.