Gateway Insurance recently launched a new motor insurance service that appears to be a good idea. The concept seems simple enough; Vehicle owners pay less for insurance the less they drive. The service is called Pay as You Drive (PAYD). This seems like a reasonable deal but a closer look may have you thinking twice.
Normal Policy
Under the normal motor insurance scheme, Gateway allows drivers to get a fixed annual insurance policy. The cost of the plan depends on the value of the policy-holders vehicle. For instance, a car valued at KES 1 million would require a cover of KES 65,000. This would cater for damages, losses and medical expenses for up to KES 30,000.
Pay As You Drive Policy
Gateway’s new vehicle insurance scheme uses the distance covered to determine how much premiums a driver should pay. The same vehicle with a cover of KES 65,000 would incur a limit of 12,000 Kilometers. The vehicle owner retains this cover as long as he does not exceed the distance during his one year policy. The premiums are then carried over to the next insurance period.
If a policy-holder exceeds the maximum distance, they can top up their premiums in multiples of KES 1000. Pay As You Drive covers damages, losses and medical expenses for up to KES 50,000.
Third Party Liabilities have a maximum compensation fee of KES 3 million per event and KES 800,000 per individual for both policies.
Below is a table showing a breakdown of how much item insurance would cost for a KES 1 million vehicle:
| Item | Normal Cover | PAYD Cover |
| Wind Screen | 10% of insured value | 10% of insured value |
| Spare Tyres | 20% of insured value (Maximum limit of KES 10,000) | 20% of insured value (Maximum limit of KES 10,000) |
| Alloy Rims | 10% of insured value (Maximum limit of KES 10,000) | 10% of insured value (Maximum limit of KES 10,000) |
| Entertainment System | 10% of insured value | 10% of insured value |
| Riots | 0.25% of insured value | 0.25% of insured value |
| Stolen Vehicle | Comprehensively covered | Comprehensively covered |
The rates remain the same but the PAYD plan has a higher compensation rate at a maximum of KES 50,000. The normal plan, however, is not limited to 12, 000 kilometers.