New Delhi, July 3 -- If you work from home, mainly use public transport, or drive only on weekends, a standard car insurance policy could mean paying a higher premium than necessary. That's because conventional policies primarily factor in your car's make, model and age, along with driver attributes such as age and credit score, rather than how much you actually drive.

Alternatives such as pay-as-you-drive (PAYD), or usage-based insurance, address this gap by allowing low-mileage drivers to pay based on the time they spend on the road. Here's everything you need to know.

Under a PAYD policy, you choose a kilometre slab at the start of the policy year-typically ranging from 2,500 km to 10,000 km-based on your expected annual usage.

To c...