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Will Usage Based Insurance Work In India?...

21 March 2016, 02:29 PM

There have been lot of talks regarding insurances and car finance in India. Car insurance in India has recently risen in prominence. There were certainly new concepts coming on the way of insurance policies about cars and usage based insurance is certainly an important among them. The system has been in place for quite some time in the United States of America as well as Europe. In fact, the process is being practised for a number of years, especially in the United Kingdom. Here, the insurance costs are quite huge and more people are opting for usage based insurance. This factor has been kept in mind because more people have become reckless with driving.

The first question, which arises in this context, is what is exactly meant by usage based insurance. Usage based car insurance is calculating the insurance premium on the go. In other words, this usually means the premium of the insurance is dynamically calculated as per the amount of money driven. Primarily there are three different types of car insurance.

Firstly, the coverage is based on the odometer of the automobile. If it is not on the basis of such circumstances, the mileage is calculated on the basis of GPS data. In other words, the number of minutes is calculated on the basis of a vehicle-independent module, where the data is transmitted from a cellphone or RF technology. Apart from these factors, the coverage is completely based on the data collected from the automobile, which includes time-of-day information and speed, in addition to the distance travelled.

The insurance provider gets data using a plug and play device, which is slotted into the OBD-II port. The GPS is used to determine the exact location, which is transmitted to the insurance providers with the help of a GSM connection. Car insurance in India had been calculated till now on the basis of the IDV of the vehicle. On the other hand, usage based insurance gets a better prospect because it has to be paid only when the driver is actually driving the automobile. This might be extremely beneficial for all those who drive on weekends usually. Thus, it might be quite of use for all those who drive their automobiles only on weekends. 

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