Can Pay As You Drive Car Insurance Policies Save You Money?
Automobile insurance companies have always had complicated formulas for coming up with the premium costs on individual car policies.
One of the factors they would always consider when determining premium levels was the amount of miles that a driver drove in a year.
When considering how many miles a person drove in a year, most insurers would just place drivers into one of three categories -- normal mileage drivers, low mileage drivers and high mileage drivers.
Insurers would place drivers into one of these three categories merely by asking the policy applicant how many miles a year they drive their car.
Some auto insurance companies are now using a new way to determine driver premiums based almost exclusively on how many miles a person actually drives.
Some car insurers are offering policies called Pay As You Drive (or PAYD) which are usage-based auto insurance policies.
These policies calculate your driving habits and the cost of your policy will be determined by your driving habits.
Once you sign up for one of these PAYD car policies, your insurance company will send out an installer to put in a monitor on the inside your car, typically underneath the steering column.
This monitor will keep track of exactly how many miles you drive.
However, these monitors will collect more information than just the amount of miles you drive.
They will meter when you use the vehicle, how often you use it, what hours of the day you use it and even how fast you drive and how fast you stop.
These monitors will transmit all this data back to the insurer's home office where the insurance company will compile this data and combine it with your personal risk factors, such as your age, history of driving citations, what type of vehicle you drive, other policies you have with them, and maybe even your credit report, and they will come up with a policy cost customized for you.
If you don't drive many miles, or don't drive during times of the day when accidents are statistically more likely, you will often score a lower premium.
On the other hand, if your metered data shows that you drive lots of miles, including plenty of nighttime miles, you may find your premium going higher.
All insurance companies are interested in these pay as you drive plans but not all are offering them yet.
Progressive offers a meter-based policy (they call it MyRate), but it may not be available in all states.
If you're the type of driver that could benefit from having a PAYD policy, you should contact your current agent to see if they offer this type of plan.
And if your current insurer doesn't have a pay as you drive plan, you may want to call around to another insurance company, because you may be able to save quite a bit of money every year by switching to a different car insurer that does offer such a plan.
One of the factors they would always consider when determining premium levels was the amount of miles that a driver drove in a year.
When considering how many miles a person drove in a year, most insurers would just place drivers into one of three categories -- normal mileage drivers, low mileage drivers and high mileage drivers.
Insurers would place drivers into one of these three categories merely by asking the policy applicant how many miles a year they drive their car.
Some auto insurance companies are now using a new way to determine driver premiums based almost exclusively on how many miles a person actually drives.
Some car insurers are offering policies called Pay As You Drive (or PAYD) which are usage-based auto insurance policies.
These policies calculate your driving habits and the cost of your policy will be determined by your driving habits.
Once you sign up for one of these PAYD car policies, your insurance company will send out an installer to put in a monitor on the inside your car, typically underneath the steering column.
This monitor will keep track of exactly how many miles you drive.
However, these monitors will collect more information than just the amount of miles you drive.
They will meter when you use the vehicle, how often you use it, what hours of the day you use it and even how fast you drive and how fast you stop.
These monitors will transmit all this data back to the insurer's home office where the insurance company will compile this data and combine it with your personal risk factors, such as your age, history of driving citations, what type of vehicle you drive, other policies you have with them, and maybe even your credit report, and they will come up with a policy cost customized for you.
If you don't drive many miles, or don't drive during times of the day when accidents are statistically more likely, you will often score a lower premium.
On the other hand, if your metered data shows that you drive lots of miles, including plenty of nighttime miles, you may find your premium going higher.
All insurance companies are interested in these pay as you drive plans but not all are offering them yet.
Progressive offers a meter-based policy (they call it MyRate), but it may not be available in all states.
If you're the type of driver that could benefit from having a PAYD policy, you should contact your current agent to see if they offer this type of plan.
And if your current insurer doesn't have a pay as you drive plan, you may want to call around to another insurance company, because you may be able to save quite a bit of money every year by switching to a different car insurer that does offer such a plan.