Who should consider Pay as You Drive Insurance
A report from the Brookings Institution estimates that two-thirds of households in the United States would save an average of $270 per year on their auto insurance if they switched to Pay As You Drive insurance. Pay As You Drive insurance premiums are based on the number of miles a person drives. Therefore, there is an incentive to drive less because the fewer miles you drive, the cheaper your insurance premiums will be.
Anyone can consider switching to a Pay As You Drive insurance program, but these programs really benefit low income and low mileage drivers. Low income drivers tend to also be low mileage drivers because of the high costs associated with frequent driving. While the amount of miles driven doesn?t impact premiums under a more traditional insurance program, high mileage driving does require spending more money on gasoline and auto maintenance and repairs. There is also more wear and tear on your vehicle, which means vehicles will need to be replaced more frequently.
Another attractive feature of Pay As You Drive is their fairness. Traditional plans charge the same premium to drivers with the same risk factors no matter how much they drive. Since drivers who drive more get into more crashes, drivers who drive less wind up paying higher premiums to make up the difference. Pay As You Drive removes this unfair subsidy and lets low-mileage drivers pay the lower premium rates they deserve.
Of course, not all low-mileage drivers are low-income drivers. Many people don’t drive just because they care about the environment. The fewer miles people drive, the less automobiles contribute to greenhouse gases, and the less congestion there is on the road. Any driver interested in protecting the ecology should also consider Pay As You Drive.
Is there anyone else who could benefit from Pay As You Drive? Drivers looking to cut their insurance outlays in tough economic times should also look at these plans. Computing premiums on the basis of miles driven gives a tangible incentive for driving less. And don’t forget, the less you drive, the less often you have to replace your vehicles. Cars tend to last longer if their drivers use them less.
The overwhelming majority of drivers are better off with a Pay As You Drive policy. If you want to learn how these innovative plans can lower your costs, help save the environment, and help you put off buying a new car, see your insurance agent. Your authorized insurance provider can answer all your questions and create a plan that may save you hundreds of dollars each year.
Tom Martens is the content syndication coordinator for Carinsurancesa.co.za. South Arica?s leading car insurance portal.
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