New Tech: Motor Premium on the basis of Quality and usage of Car
A device that captures all your driving behaviour, right from how fast you go to when you apply brakes, will now help decide the cost of your motor insurance. For the first time in India, a private insurer has introduced telematics — the technology of long-distance transmission of information — to price motor insurance.
The device, which plugs into the car’s on-board diagnostics (OBD), relays information on quality of driving and usage of cars to the insurance company, which uses the data to price the policy at the time of renewal.
Currently, four factors determine pricing of a vehicle’s insurance — its make, model, year of manufacture and location. Bajaj Allianz General Insurance has introduced Drive Smart — a policy which, at the time of renewal, will price insurance based on usage. The device and service is available for free to anyone who buys Bajaj Allianz’s car insurance with the add-on covers.
“There are many car owners who use their car very sparingly and are very careful drivers who end up subsidizing others. Telematics will help us price insurance according to the risk,” said Tapan Singhel, MD & CEO, Bajaj Allianz General Insurance.
Vijay Kumar, president (motor insurance) at Bajaj Allianz, said, “The device will work on every car that has been manufactured after 2010 as all vehicles since then are OBD2-compliant.” The Bharat Stage IV norms, which prescribe standards for car emissions, also include a mandate on on-board diagnostics.
The device connects the car to an app on the owner’s smartphone and recognizes when the driver is over-accelerating or braking suddenly, or if there is a sudden impact. While the telematics helps the insurance company in gathering data, it provides car owners a host of benefits which until now required a separate payment of a few thousand rupees. For instance, the driver can request roadside assistance by tapping a button on the app in the event of an accident.
The owner can also set up notifications for every time the vehicle breaches a speed limit or goes outside a ‘geo-fenced’ area in the map. The owner can also share live and static location of the car with friends. According to Singhel, the technology will also enable the company to come out with a ‘pay as you go’ auto insurance plan where the individual is charged according to how much he uses the vehicle.
The add-on covers include round the clock roadside assistance, accident insurance, key and lock replacement cover and personal baggage cover. The add-on covers cost roughly 50% of the basic insurance. For instance, if the standard ‘all risk’ cover on a Honda City is around Rs 9,000, the policy with add-on rates would cost around Rs 14,000.
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