Smart Driving Rewards: IRDAI Expands Usage-Based Vehicle Insurance in 2025

Category: Vehical Insurance
Date: 19-06-2025

In a significant move that strengthens the shift toward personalized insurance, the Insurance Regulatory and Development Authority of India (IRDAI) has expanded the scope of usage-based vehicle insurance in 2025. Building on its earlier 2022 initiative, IRDAI has now encouraged insurers to enhance offerings that reward safe and low-mileage drivers with customized premiums.

These updated policies—such as "Pay How You Drive", "Pay As You Drive", and "Drive Safe Discounts"—use real-time telematics, GPS data, and driving behavior analytics to determine insurance rates. Premiums are now increasingly tied to driver habits, distance traveled, and risk scores, offering substantial benefits to responsible vehicle owners.

“With India witnessing a surge in tech adoption in vehicles, this is the right time to move toward dynamic pricing. It promotes fairness and encourages better driving habits,” said a senior IRDAI official.

Additionally, IRDAI has simplified the framework for multi-vehicle floater policies, allowing families and businesses with multiple cars to enjoy a single policy with reduced premiums and enhanced coverage flexibility.

What’s New in 2025:

AI-driven risk assessments in insurance plans.
Eco-driving rewards for fuel-efficient, environment-friendly driving.
Support for connected car ecosystems.
Availability of insurance premium dashboards for real-time tracking.

Industry leaders see this as a customer-centric shift that promotes safety, transparency, and efficiency.

“Smart vehicle insurance is no longer just a Western trend—it’s now a mainstream offering in India, aligning perfectly with the lifestyle of modern, tech-savvy drivers,” said Rajeev Singh, CTO of a leading InsurTech startup.

With India’s roads getting smarter, so are its insurance options. For drivers who play by the rules and drive with care, 2025 is the year when insurance finally plays fair.

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Smart Driving Rewards: IRDAI Expands Usage-Based Vehicle Insurance in 2025