Most of us are familiar with the basics of automobile insurance. You pay a certain amount for a premium (whether it be once a month, once every six months, or once a year) for the coverages you need, get an insurance card and off you go. You rarely have contact with an auto insurer unless you have to file a claim. Well, now there is another option available to consumers in the world of auto insurance – “pay as you go” car insurance.
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“Pay As You Go” Car Insurance?
You might have heard of “pay as you go” cell phones. This concept of paying based upon monthly usage is now being applied to car insurance. It is not a dramatically new idea, as “pay as you go” insurance has been available in other countries (like the U.K.) for quite some time. It has finally arrived in our shores and it can give some motorists significant savings on auto insurance – anywhere from 25% to 50% off their premiums. Right now this form of car insurance is only available in thirteen states, but experts expect it to spread nation wide soon.
How “Pay As You Go” Car Insurance Works
The basic concept is this – with “pay as you go” the auto insurance company monitors your driving usage and charges a monthly premium based upon it. In order to track your driving habits, the insurance company installs a transceiver in your vehicle. This transceiver (which is about the size of a deck of cards) records such data as: how many miles you drive, when you drive, your driving speed, and any sudden stops and starts your vehicle makes.
This data is analyzed and there are a number of things that the auto insurance companies watch out for. They will slap you with surcharges if you engage in risky behavior like speeding or if they see that you have suddenly hit the brakes a few times or have quickly accelerated. Auto insurance companies also scrutinize the time of day you drive your car. If you drive during what is considered higher-risk hours (12 am – 4 am) your rates will increase. One thing that the transceiver does not track is your location; the transceivers are not equipped with GPS capabilities.
Who “Pay As You Go” Car Insurance Is Good For
Is “pay as you go” car insurance right for you? There are number of different factors to consider. Generally, this type of car insurance is best for motorists who drive less than ten thousand miles per year. Also, if you are a driver who doesn’t do much driving late at night and drives fairly cautiously, “pay as you go” could fit your auto insurance needs.
There are definitely drivers out there that could benefit from this kind of insurance. For example, for families that have a secondary vehicle they drive less frequently, “pay as you go” might be ideal for the second car. These families could see some big savings versus having traditional car insurance on this secondary vehicle. Also, drivers who fit into the “high-risk” category should contemplate purchasing this type of insurance. Particularly, teenagers or drivers who have been convicted of a DUI and pay exceptionally high rates could use “pay as you go” as a way of attaining affordable premiums.
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Who “Pay As You Go” Car Insurance Is Bad For
As you might have noticed, there are some definite cons to having “pay as you go” car insurance. The biggest downside is privacy. This insurance is kind of like being a teenager who is driving around with their parents in the backseat. Do you mind having your car insurance company know exactly how you drive? If this “big brother” style relationship annoys you, mostly likely “pay as you go” is not right for you. And if your driving style borders on the more risky side (i.e. if you are prone to having a lead foot) this insurance would not be a good fit.
Essentially, one should only consider a “pay-as-you-go” arrangement if you stand to save money versus having traditional car insurance. It is important to note that insurance companies often charge for the transceiver device itself. So right off bat there is a charge for simply having the device installed, which cuts into your savings potential. And then if your average annual mileage is over ten thousand a year, you might end up paying more for “pay-as-you-go” car insurance.
Other Things To Consider
Besides possible monetary benefits, there are other advantages to having “pay as you go” auto insurance. For one, it could actually improve your driving habits. If we know that someone is watching how we drive, and that if we engage in poor driving habits it will cost us money, we will be more likely to drive safely. This includes slowing down and driving the speed limit and avoiding unnecessary hard breaking and fast accelerations.
Secondly, this insurance could a positive impact on your overall health. Car insurance can affect your health? In this case, your form of car insurance might force you to exercise more. When you know that driving less will save you cash, you might consider walking or biking to more places. This increase in physical activity would have enormous benefits to your health, and you could drop some extra pounds. So if saving money isn’t enough incentive, perhaps losing weight is for some motorists.
Get A “Pay As You Go” Car Insurance Quote
Whether you are seeking to purchase “pay as you go” car insurance or are interested in the more traditional variety of car insurance, you need to shop around. Only by comparison shopping can you find the best coverage available for the least amount of money. And if you are looking to save money on car insurance then you have come to the right place! We here at Cheap Quotes Car Insurance have partnered with the nation’s top auto insurance providers so you can compare rates and get the right car insurance for your budget. Fill out multiple online quote forms and start saving today!