Pay As You Go Car Insurance
One new coverage option that has a growing number of drivers trying it out is pay-as-you-go-car-insurance. Although only introduced into the market about 4 years ago, its popularity has steadily been growing. Perhaps more people are signing up for this unique type of insurance to get their premiums down to where they should be. With this type of “pay for when you drive” insurance program, some motorists have been able to cut their insurance bill in half.
This is designed for a new segment of motorist that does not drive much, yet pay about the same as drivers who drive 300% more. In recent years, a few select insurers have entered this market to serve low mileage drivers. Also, those drivers that are careful and ticket free should get a huge break on their car insurance rates.
What is Pay As You Go Auto Insurance?
This type of niche insurance is simply paying for auto insurance for the actual miles you drive. So many motorists for decades were charged a flat fee for coverage, even if they drive very few or no miles at all. In fact, one of the upstarts in the pay as you go insurance market, MetroMile, estimates that about 65% of drivers overpay.
These people who pay too much to get insured then subsidize the high mileage drivers. Pay to go insurance main objective is to create a more fair set of insurance pricing for the real miles you drive. Compare rates now at Good To Go insurance online.
How Does Pay As You Go Insurance Work?
A small tracking Telematics device is installed in your automobile, which is not that much bigger than a smartphone. The device then records and analyzes your driving. This includes:
- How Many Miles You Drive Each Day
- How Fast You Drive
- How You Brake
- When You Drive
The company sends the information continually to the insurer, who then crunches the data and comes up with a rate profile. In general, the more miles you drive and the risky you are behind the wheel, the higher your rates will go. Likewise, the less mileage you have each month and the safer you drive, the less you will pay for coverage.
Another benefit of a mileage-based policy is many insurers will let policyholders check the Telematic data online. This will help motorist improve in areas they walk in. If improvements are made in their driving, they can qualify for a cheaper rate the next payment period.
It is important to note that each insurer sets their own pricing for the miles driven. Rates can also vary on where you are driving and what hours. You are more exposed to an accident driving in rush hour traffic in downtown Los Angeles for example than going to your local gym at 9 pm at night. Overall, the less risky you are, the lower you will pay for coverage.
Who Needs Pay As You Go Car Insurance?
Let’s face it, car insurance is an expense that almost all of us have to pay. While coverage is mandatory, there are new options available that can lower your premiums by 50% or more. With the average annual U.S. car insurance cost at about $1,321, you could potentially save $650 or more by switching to pay as you drive insurance.
For those on a very tight budget, like students, this could be the difference between making it through the month or falling behind. Here are some typical drivers that can take advantage of this new type of auto insurance.
- You Don’t Drive Much – Less Than 1,000 Miles Per Month
- You might live close to work and ride your bike normally or get a ride with a co-worker
- You Now Work at Home and Do Not Drive as Much
- You Drive Safely
- You are a Safe Under 25 Motorist and Need Cheaper Rates
Companies That Offer Pay Per Mile Auto Insurance
MetroMile
This fast growing upstart is one of the leaders in usage based auto insurance. They target urban, younger motorists who don’t often drive. The companies motto is “the less you drive, the less you pay for insurance.” Metro-mile sets rates based on normal factors like a drivers age, driving record, zip code and credit rating. Then customers are billed per actual mile driven. It claims most people can save about 50% off an average policy if they drive about 100 miles per week or less. Customers bills are calculated by adding the rate per miles driven that month to the set rate.
MetroMile is able to offer these lower rates because by reducing the miles driven, results in fewer accidents and reduced claim payouts. The same quality coverage is offered, but the drawback is drivers must limit the miles driven to save a significant amount of money.
All customers must install a Telematics tracking device, which monitors driving behavior and the miles driven. Nearly all cars that were made after 1996 will have the OBDII port, that the Telematics device is installed into. If you drive less than 100 miles per week, MetroMile might save you hundreds per year. Coverage is currently offered in Washington, California, New Jersey, Illinois, Oregon, and Virginia. The company aims to roll out coverage in more states in the coming years.
Esurance
The company that was built for the internet is a leader in pay-per mile policies. Esurance has been offering their service for customers that drive fewer than 10,000 miles annually. The company is targeting younger, technologically savvy clients who employ various commute options and drive fewer actual miles each month.
Customers pay per mile driven. If they plan on going on a long drive, only the initial 150 miles is applied. Esurance is currently testing the service in Oregon but may roll it out to other states if successful.
Progressive
This direct insurer has been a leader in innovative insurance products for years. Progressive has a Telematics based program that gives customers discounts based on the miles driven, hours driven and driving behavior. Hard braking is one of the factors that will drive up rates, as well as excessive speeding.
In addition, driving late at night during the weekends and in peak rush hour traffic will cause a surge in rates. Drivers that are the riskiest get the biggest discounts. To qualify, the motorist must install a Telematic device and allow their driving behavior to be monitored. Some drivers can save 25% or more by using Progressive’s pay-per-mile insurance program.
Advantages of Telematic Insurance coverage
With this type of unique insurance, control is in the hands of the driver. While premiums are based on factors like age, education and marital status in traditional insurance, usage-based insurance focuses on your driving habits.
Also with this coverage, you can view the telematics data and monitor how many miles you drive. You can then decide whether to cut back on driving to save more.
Companies like MetroMile give you the opportunity to save on average about $500 per year. While your savings can go up to about $650 per year if you drive as 2,500 miles or less.
Disadvantages of usage-based insurance
Switching from the regular car insurance to this usage-based insurance is not for everyone. You will be charged for the installation of the tracking device. Also, your driving will be monitored at all times. If you drive too much or are a risky driver, your rates could go up.
Pay As You Drive Insurance Quotes
For motorist who drive more than 1,000 miles per month, there is not much of a price advantage in pay as you go car insurance. Get a free rate check up with Good to Go Insurance Company and compare side by side rates in minutes. Save more today and get the cheaper coverage you deserve.