Sometimes called usage-based insurance, pay as you go auto insurance is coverage where the price is based on how much you are on the road.
This type of auto insurance offers advantages to those who live in safer driving areas and are not on the road that often. In fact, this type of insurance is a good example of incentivizing people to drive less so that they can save money while protecting the environment.
However, it is not designed for drivers who spend a great deal of time behind the wheel, especially in hazardous areas which negatively affects insurance premiums.
Of course, how does the carrier know that you are staying under the limit? The answer is usually by methods that may invade your privacy to a certain degree. The companies that do provide this policy may use a GPS to track the movements of your vehicle or offer a usage-based system that looks at the overall mileage.
There are limitations as the system used may record speed which may be an indicator of bad driving, but they cannot account for risky behavior such as road rage, swerving, or making poor decisions that put others at risk.
This means that you might be punished for driving normally given the conditions of your location, but others may benefit even if they still present a danger to the public.
This type of pay as you drive insurance offers several advantages to those who watch the miles they drive and want to spend less.
Reward: If you have been a safe driver for years, live in a low-risk area, and drive only a moderate amount at a time, this type of insurance will probably work for you. It rewards drivers who have been keeping their mileage in check while avoiding accidents, so if that describes your driving experience over the past few years, then you should check out this policy.
Awareness: One interesting advantage for drivers is that it makes you more aware of the mileage that you are putting on your vehicle. It is recommended that you keep track of your odometer for a week so that you understand how many miles you put on your vehicle.
If it is under the pre-set limit, it’s possible to save a considerable amount compared to standard life insurance policies.
As the pay as you drive insurance companies reward safe drivers with this type of policy, so too can drivers who are in high-risk categories save as well if they do not drive that often.
For teenagers and those with poor driving records, if their average miles behind the wheel is low, it’s possible for them to save money using this program.
If you believe this type of insurance policy may work for you, then you should call your agent or check out which companies carry the coverage online. You should also discuss whether you want to pay full at once or monthly installments or without upfront payment.
You will find that there is only few pay as you drive insurance companies as most of the major insurers do not provide this type of policy.