Pay-as-you-drive insurance plans more popular among hybrid and remote workers, says report

A recent report by PolicyBazaar has shown that the demand for pay-as-you-drive (PAYD) motor insurance plans has increased by 25% in the last one year among hybrid and work-from-home workers. This segment accounts for 35% of the PAYD market, representing the largest share, the report said.

The study showed that the demand for PAYD plans has increased in many consumer segments such as remote workers, households with more than one car and homemakers due to favourable regulatory guidelines.

What is a pay-as-you-drive insurance plan?

In a PAYD plan, the insurance premium is calculated according to the actual distance driven by the vehicle as opposed to a fixed annual payment. It simply means that the insured individual has to pay for the insurance based on the distance driven by them rather than a direct fee for the plan in a specific period of time.

This means that those who drive less, pay less. There is no condition for a maximum distance to be driven.

Families with multiple cars represent 25% of the total PAYD customer base. They’re also the fastest growing segment with a 40% year-over-year growth in demand for PAYD plans.

Similarly, homemakers represent 15% of the consumer base and are significantly expanding in the market. There was a 30% increase in the demand for PAYD plans in this segment over the past year.

Preference for vehicles among the segments

The report revealed that hybrid and remote workers prefer hatchbacks the most (40%), followed by sedans and SUVs (30% each). This segment also generally chooses the 5,500 km distance slab the most (33%), followed by 7,500 km (29%) and 2,500 km (21%).

Families with several cars mostly go for hatchbacks (60%), followed by sedans and SUVs (20% and 10% respectively). The households with multiple cars opt for the distance slab of 2,500 km the most (30%), followed by 5,500 km (27%), and 7,500 km (20%).

Furthermore, most homemakers prefer hatchbacks (50%) over sedans and SUVs, which are preferred by 20% each. They also mostly prefer the distance slab of 5,500 km (35%) just like the remote workers, followed by 2,500 km (27%), and 10,000 km (17%).

Location wise distribution

The hybrid and remote worker segment opting for PAYD plans is majorly located in Bangalore (11%), followed by Delhi and Gurgaon (10% and 6%, respectively). Some of them are from Pune (5%) and Hyderabad (4%) as well.

Households with multiple cars are equally found in Bangalore and Delhi (8%) followed by Chennai (6%), Pune (4%) and Gurgaon (4%).

Similarly, homemakers who prefer the PAYD plans are predominantly present in Delhi and Bangalore (10% and 9%) followed by Chennai (7%), Pune (5%) and Mumbai (5%).