Significance Of Floater Motor Insurance Policy In Your Life

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Significance Of Floater Motor Insurance Policy In Your Life
Sanjay Datta - 09 March 2020

The concept of a floater policy until now existed in health insurance wherein a single plan offered coverage to all the members of a family. Soon, it could be extended in the motor insurance segment.

Till now, if you were an owner of more than one vehicle, you needed to avail of an equal number of motor insurance policies. However, this could soon be a thing of the past with insurers coming out with a floater motor insurance policy that would provide coverage to all your owned vehicles under a single plan.

While India’s regulatory is at par with global norms, changing customer demands warrant innovation. The floater motor insurance plan is a part of the sandbox initiative, where insurers can experiment and test innovative financial products.

The initiative is aimed to carve out a conducive and safe environment whereby insurers can test their products in a controlled environment, and the consequence of a failure, if any, can be meaningfully contained.

To put it otherwise, the sandbox approach gives an opportunity to experiment and learn about technology and product, before it’s finally adopted and disbursed among the masses. Another objective of the sandbox initiative is to strike a balance between the orderly growths of the sector and protect the interest of policyholders.

A single policy offering coverage to multiple vehicles would save time and hassles involved in purchasing different plans. As a customer with more than one vehicle in your fleet, such a policy has several benefits.

Easy and convenient purchase

One single floater motor insurance plan spells the convenience of buying in case you have more than one vehicle. Not only it saves time but also frees you from documentation and other processes involved in buying multiple plans.

With a single plan, there’s no need to fill up several proposal forms and provide the same set of documents again and again. You need to take the activity only once and get coverage for all your vehicles simultaneously. Also, it frees you from the hassle of remembering multiple policy renewal dates.

Also, with so many motor insurance policies available in the market, comparing and buying more than one policy is a tedious process. A single plan providing coverage to all the vehicles you own will ease the process to a great extent.

Premiums charged on usage

The product is in an evolution phase and various differentiated offerings can be expected. One such feature can be a hybrid product of floater with “Pay How You Use (PHYU) or Pay As You Use (PAYU)” which would provide usage-based premium even in a floater policy.

Here, premiums may be charged on the usage of your vehicles. For example, if you drive your vehicle for say 100 km in a month, the premiums will be computed accordingly. In other words, kilometer-based usage will be the criteria to determine the premium. Today, if you have two to three vehicles, irrespective of their usage or the distance covered, you need to shell out a pre-defined premium.

An app-based interface of the plan will link multiple vehicles you have along with the flexibility to add or delete vehicles. You can switch off and on the insurance cover as per your needs. The plan will also allow you to customise the sum insured as per your requirement.

Also, you can expect your driving pattern and on-road behaviour to be taken into account while determining the premium amount. If you are a responsible driver who obeys traffic laws and drives responsibly, you will be charged less and vice-versa. This will also promote safe driving in the process.

Change of policy details at one go

The floater plan will allow you to change all the policy details at one go and receive continuous coverage. Today, in case you need to change any information, you need to do it individually for each policy.

However, with a single floater plan, there is no need to change individual policy details.


As evident, a single coverage to all vehicles will provide owners the much-needed peace of mind as they are financially cushioned against any losses.

Given the dynamics of the motor industry, a single floater plan covering more than one vehicle will ease insurance purchases and enhance its penetration in the coming days. Also, with shared access gaining momentum, the product is pretty much relevant in today’s context. Bringing customisation and convenience on the table by making the renewal process a one-time affair, the floater policy will save time and money for policyholders in the long run.

The author is the Chief - Claims, Underwriting and Reinsurance, ICICI Lombard General Insurance

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