Motor insurance, also known as auto insurance, is mandatory in India under the Motor Vehicles Act, 1988. It protects vehicle owners from financial liabilities arising from accidents, theft, or damage to their vehicles. There are two primary types of Motor Insurance in India: Third-party liability insurance and Comprehensive insurance.
Third-party liability insurance covers damages caused to third-party property or individuals. In contrast, comprehensive insurance offers broader coverage, including damages to the insured vehicle, personal accident cover for the owner-driver, and protection against theft and natural calamities.
The traditional approach to motor insurance has always involved fixed premiums based on factors like the make and model of the vehicle, age of the driver, and geographical location. However, with advancements in technology and changing consumer preferences, the insurance industry in India has embraced innovation, giving rise to a new concept called "Switch Off and Switch-On Insurance," also known as Usage-Based Insurance (UBI)/ Pay as you drive.
Pay as You Drive’ insurance can save 5-20% over a general car insurance plan. The exact number of savings will depend on various factors such as car model, age and registrations.
With Switch off Insurance, policyholders have the option to deactivate certain coverage or components of their motor insurance policy during periods when they do not use their vehicles. During these periods, the policyholder can temporarily disable the coverage for specific risks, such as accidental damage or theft, while still maintaining the mandatory third-party liability coverage as required by law.
This insurance plan works well for those policyholders who park their vehicles for an extended period, such as during vacations or when they have multiple vehicles but use only one at a time. By switching off certain coverage temporarily, policyholders can reduce their insurance premium during the inactive period.
This insurance plan allows policyholders to reactivate the disabled coverage components when they start using their vehicles again. Once the coverage is activated, the policyholder gets full protection with the comprehensive motor insurance cover as per the terms and conditions of the policy.
Cost-Effective: One of the primary advantages of this insurance model is the potential cost savings. By turning off coverage during periods of inactivity, policyholders can reduce their insurance premiums significantly.
Flexibility: Policyholders can adapt their coverage based on their individual needs and driving habits. This level of flexibility makes motor insurance more accessible and appealing to a wider range of drivers.
Personalization: Switch Off and Switch-On Insurance allows policyholders to tailor their insurance plan according to their specific requirements, ensuring they pay only for the coverage they need.
Enhanced Control: With the ability to manage their insurance coverage through an app or online platform, policyholders have better control over their policies, promoting a seamless and user-friendly experience.
While Switch Off and Switch-On Insurance offer several benefits, there are certain limitations and considerations to keep in mind:
Unprotected during Switched-Off Period: It is crucial for policyholders to understand that the vehicle will not be insure during the switched-off period. Any damages, accidents, or theft occurs during this time will not be eligible for insurance claims.
Continuous Insurance: Insurers may set specific rules and conditions regarding the minimum and maximum duration for Switch Off periods to ensure continuous insurance coverage.
Eligibility Criteria: Not all policies may offer Switch Off and Switch-On Insurance. The availability of these features may vary from insurer to insurer and depend on the policyholder’s claim history and other factors.
Impact on No Claim Bonus (NCB): Policyholders should consider the impact of Switch Off periods on their NCB, as a break in insurance coverage might affect their NCB eligibility when the policy get switched on again.
Switch Off and Switch-On Insurance are innovative features that have added flexibility and cost-saving benefits to the traditional motor insurance policy in India. It empowers vehicle owners to customize their coverage based on their needs and usage patterns, ultimately contributing to a more customer-centric insurance landscape. However, policyholders must carefully evaluate the pros and cons and consider their individual requirements before opting for Switch Off and Switch-On Insurance. It is advisable to consult with insurance experts or agents to make informed decisions and ensure comprehensive protection for their vehicles.
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A: The main benefit of Switch off Insurance is cost savings. By reducing coverage or pausing it during periods of non-usage, policyholders can save on insurance premiums. This option is ideal for situations such as using a vehicle for going on vacations.
Switch-On Insurance comes into play when the vehicle is back in use after a period of non-usage. Policyholders can "Switch On" their insurance coverage to the standard level when they resume regular driving. The premiums for this active period were evaluated based on driving behaviour, distance travelled, and other telematics data collected through tracking devices or mobile apps.
A: Switch On Insurance offers several benefits:
Environmentally Friendly: Reducing mileage during inactive periods can contribute to lower carbon emissions and a more eco-friendly approach to driving.
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