Recently, some insurance companies have introduced a new feature for auto insurance. This new feature allows a policyholder to activate and deactivate insurance coverage based on the car’s usage. It is also referred to as pay-as-you-consume insurance coverage. This feature is included in the motor insurance renewal policy.
How Will This Feature Operate?
With this feature, the insurance company allows policyholders to pay only when the vehicle is in use. A vehicle owner can activate their auto insurance coverage when the car is in use and deactivate it when not. Nevertheless, the benefits for non-use will only accrue if the non-use period is continuous for at least 24 hours, i.e., the vehicle policy must be inactive for a continuous 24-hour period to earn the benefits.
How to Utilise the Pay-As-You-Consume Feature?
To utilise this feature, consumers must first opt for it with an auto insurance policy. The user must obtain the motor premium calculator app from the internet. Then, they must provide their personal information and familiarise themselves with their consumer details for onboarding. Once the policy begins, the policyholder can activate the coverage whenever using the vehicle. They will also have the alternative to cancel coverage whenever desired.
If the app is inactive or turned off for 24 hours, the consumer will receive a reward of one day. Therefore, the vehicle owner will accrue “reward days” for each inactive day. Reward days can be redeemed. Please note that the benefits and rewards aspect of this kind of feature would differ from insurer to insurer. To get a thorough idea of what your policy may allow, it is ideal to reach out to your insurer.
Increasing Demand For Power On and Off Policy
Here’s the rationale behind pay-as-you-consume auto insurance:
Demand for need-based insurance coverage has increased since the onset of the COVID-19 pandemic. Most vehicle owners’ transportation preferences have shifted due to hybrid and work-from-home policies, rising fuel costs, and accelerating inflation. This prompted companies to include a convenient on/off switch feature in the auto insurance policy.
Should You Opt for the Pay-As-You-Consume Feature?
This type of insurance plan or feature may be suitable for individuals who seek protection for their car for certain days only. For instance, many people refrain from using their cars within their localities or city. They may prefer instead to take it out only for long car drives occasionally. Thus, for them, paying the premium for the specific durations within which they use the car may be a more cost-effective option.
However, if you are opting for this feature, then you should remember to switch the insurance coverage on and off every time you drive. If you have switched off the coverage, and something happens which causes you to raise a claim, then it may not be approved.
Hence, one must look at the pros and cons of the pay-as-you-consume feature before opting for it. You can opt for the feature when you are carrying out your yearly motor insurance renewal.
Any prospective purchaser of this auto insurance feature should do their homework before signing up.
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