Low usage All Year? How to Reset your Car Insurance Strategy for 2026?

You're already paying a significant premium for your comprehensive car insurance. It's a total loss if you don't even use it. As of June 2024, the IRDAI master circular mandates that insurers offer pay-as- you-drive cover as a primary option with car insurance. This is in addition to the traditional comprehensive coverage with depreciation protection.

This move shifts from a one-size-fits-all insurance policy to a more personalised one. Therefore, you can reflect on how much you drive and how safely you drive. This is perfect for low-usage customers. Continuing with your regular car insurance in 2026 means you're paying more than you should. In fact, you're paying for the risks that are significantly less likely to happen. Resetting your car insurance strategy in 2026 can help you get significant car insurance discounts and optimise your cover types.

Importance of Pay As You Drive in India

Third party car insurance is mandatory by law according to the Motor Vehicles Act of 1988 in India. However, many vehicle owners in India drive their vehicles less frequently but want to be covered for their own damage. This pay-as-you-drive cover offers them convenience and benefits.

Pay-as-you-drive simply implies usage-based car insurance. The insured person pays for car insurance online based on the distance they've driven, rather than flat fees. Therefore, if you rarely drive your vehicle, you'll pay a lower premium. There is no pre-determined condition on how much the car should be driven.

If you have a Pay as you drive insurance policy, you can also get renewal car insurance discounts for not raising any claims during the policy year. Although relatively new in the market, it offers a wide range of benefits.

Want to save big on premiums in 2026? Pay-as-you-drive is one of the most affordable policies to invest in. Compared to your regular policy, the pay-as-you-drive car insurance online is available at affordable rates. Here's why investing in pay as you drive can be an ideal choice in 2026 if you're a low usage driver.

1. Pay As Per Your Use

For comprehensive and own damage car insurance policies, the insurance companies charge based on the liability amount. The usual policies do not consider how often you use your car. Therefore, the premium remains the same throughout the year.

Now, if you're using your car less and do not want to spend a lot of money, get pay-as-you- drive. The premium is charged based on the actual distance you've covered. So, the less usage, the lower the premium will be.

2. Make and Model Don't Matter

For the pay-as-you-drive insurance, the make and model of your car doesn't matter in calculating the premium. Luxury and high-end cars usually have higher car insurance premiums.

On the other hand, if you have to pay as you drive cover for your luxury car, you'll be paying less premium. This will be valid if you don't use your vehicle often. Irrespective of whether it's a regular or luxury car, you pay for how much you drive.

3. Savings on Kilometre Slabs

You can claim benefits under your own damage car insurance, depending on the mileage band. The benefits can range from 0% to 25%, depending on the kilometre slab you choose.

You get more car insurance discounts on lower kilometre slabs. This indicates that your car is used less frequently. Therefore, more discounts on the premiums. However, the discount lowers as you move up the kilometre slab. Here's an ideal understanding of how much you'll be saving:

Mileage Band	Benefits covered by Basic Own Damage Premium
0-2,500 kms	25.00%
2,501-5,000 kms	17.50%
5,001-7,500 kms	10.00%
7,501-10,000 kms	5.00%
>Above 10,000 kms	0.00%

Know the benefits of pay-as-you-drive over comprehensive car insurance in our blog, Pay-As-You- Drive vs Comprehensive Cover: Which is More Beneficial?

If you use your car less, here's a definitive guide on how to reset your policy in 2026:

1. Calculate your annual usage:

Use your car's odometer to calculate your yearly mileage. References to the monthly logs. If the annual threshold is less than 7,500 km, the pay-as-you-drive cover will be an ideal choice.

2. Check for the covers you want:

Irrespective of how much you drive, third-party car insurance is mandatory. However, when purchasing pay-as-you-drive, make sure to reassess your coverage. You can either proceed with comprehensive insurance or opt for the PAYD variant.

3. Check for discounts:

Check the discount for lower mileage slabs and claim-free years. Opting for a pay-as-you- drive plan and a claim-free bonus can offer better overall fees than the flat-premium policy.

4. Revisit IDV choices and add-ons:

The IRDAI master circular notes numerous changes. Some of these changes were meant to simplify comprehensive car insurance. For the 2026 renewal, make sure to align the add-ons accordingly. Assess the risk profile and usage patterns to ensure you pay for what you need, not a generic plan.

5. Plan for exceptional use:

If you use your car less, but go on long road trips once in a while, consider that as well. Understand the process for billing extra millimetres. Clarify the claim process to avoid any travel-distance disputes.