Are Pay-As-You-Drive Car Insurance Quotes a Good Idea?

A new phenomenon in car insurance may change the way people purchase policies in the future. Known as pay-as-you-drive insurance, this innovative coverage option is available from many of the top insurance companies. Like any other policy, you can compare prices by getting car insurance quotes to find out where you save the most money.

What Is It?

A lot of people have never heard of this type of policy and according to one survey, many say they wouldn't sign up for it anyway. However, a third of the respondents said they would sign up if doing so resulted in a discount of at least 25 percent.

The reason for the hesitation? Companies install a device on the driver's car to track mileage. The idea feels invasive to many and most aren't sure what is being tracked. Currently, only specific information is tracked through the device:

  • Mileage
  • Time of day for driving
  • Speed
  • How hard the brakes are hit

Even if no other information is tracked, the idea of any tracking device can feel intrusive.

The Myths of Pay-As-You-Go Insurance

Most people don't understand this type of insurance. The survey showed that drivers between the ages of 18 and 29 were most familiar and even they missed the question about whether drinking and driving is recorded (it's not).

Not all states offer this insurance and those that do may not record all of the same information. For example, if you live in California, the device won't be tracking your speed.

Who Benefits

People who drive less than the average person get the most benefit out of this program, which is designed for those who drive less than 12,000 or 15,000 miles each year. Generally, drivers pay a small base premium with a charge per mile. For those who don't drive very much, they can save a lot over traditional insurance policies.

Many people are not aware of this option when obtaining car insurance quotes. For those who have heard about pay-as-you-go, they may feel concerned about privacy issues. Unfortunately, a lot of the hype surrounding the insurance is negative and often inaccurate.

People have various reasons about why they aren't interested in this kind of insurance even if it does offer discounts. According to the survey, the main concerns are:

  • Lack of information
  • Not worth the hassle
  • Private data will be shared
  • Rates may increase

A common view is that speeding decreases the discount received. While that would make sense from a logical standpoint, the truth is that the device doesn't know the speed limit of where you are driving. In most cases, speed tracking only affects you if you are driving more than 80 miles per hour.

Pay-as-you-go car insurance is relatively new and many drivers do not understand what it is and how it works. They are also not aware of how many well-known insurance providers offer this type of policy. Although not for everyone, pay-as-you-go insurance coverage may be a viable option if you don't drive very much and if you want to save money with the insurance coverage you have. This creative solution is just another way auto insurance is evolving to meet the needs of today's driver.



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