Is pay-per-mile auto insurance for me?
Many people wonder how auto insurance premium are determined. Your neighbor drives so much more than you, yet both of you are paying almost the same insurance premium? This perplexing thought has crossed many minds. Authentically auto insurance was determined keeping in mind the risk factors of the individual like age, car type, past driving record etc. Once the insurer is through with the drivers’ risk analysis and the amount of coverage wanted, a fixed rate of premium is determined. This premium could be paid monthly, quarterly or annually as per your desires. However, the times have changed and a revolutionary idea namely ‘pay per mile auto insurance’ is gaining fast prominence.
Pay per mile auto insurance or pay as you drive auto insurance is extremely beneficial for people who drive less that their regularly-insured counterparts. Now the amount of insurance to be paid is in your hands and is completely your choice. You must keep in mind that this type of insurance plan is not yet widely available in all states. However, it is quickly catching up everywhere because it creates a win-win situation for the insurer and the insured.
Are you facing financial difficulties for the moment? Keep you car parked in the garage and you would be saving on both gas and will be able to get a cheaper auto insurance quote. This flexibility proves to be of help for companies too, because the less one drivers the less is the possibility of an accident and even less possible that the driver will come up with a claim. Another major advantage of the pay per mile auto insurance is that it contributes in making the environment cleaner. Less driving leads to less pollution and thus benefits the entire society at large!
Keep in mind that everything has its own set of pros and cons. While pay per mile insurance may be a plus for one person it might be a hassle for another. You need to give it a thought and calculate whether this policy is meant for you or not. If you are driving less than 1000 miles a month then you can contemplate moving on to pay as you drive insurance plan. But anything more than 15000 miles a year is strictly a no-no for such a plan. If you drive every day to work or you use your car on the job or have too many weekend outings then you are not the correct candidate for this plan. Pay per mile auto insurance is available to senior citizens, low income drivers, part time workers and more.
Auto insurance companies need to be sure of how much you are driving exactly. They cannot leave room for any tampering or frauds. To determine the exact number of miles covered by you the auto insurance company is most likely to install a proprietary odometer or a GPS system into your car. Proprietary odometer will transmit your mileage to the company through an installed cell phone. Similarly, the GPS will track the routes and the exact mileage and send the information to the company through an embedded cell phone. This device is brilliant for the insuring company. Not only does it provide the accurate mileage it also helps the company to know what sort of traffic you face and where you drive. However, from a drivers point of view, this might be considered an intrusion to privacy. The value you give to your privacy may outweigh the potential savings! The final call of course is yours.
The next most obvious question is that how much one saves by switching to this insurance policy. Well the answer is that it completely depends on how much you drive. Prime candidates could save up to 35%, according to expert estimates. Also remember that you would be expected to pay some fixed amount of policy amount too. Only a certain portion of the premium would be determined by the mileage you cover. Some insurance providers may also want you to pay for your miles upfront. Then depending on how many miles you covered you could get a credit back or pay more as required. Policies and plans vary from one company to the other.