If you’ve ever wondered why you pay so much for auto insurance when you drive so few miles, you may be interested in a pay-as-you-go auto insurance policy. While it’s not right for every driver, there are situations that are tailor made for this form of auto insurance.
What is Pay-As-You-Go Auto Insurance?
Known by multiple names — usage based, pay-as-you-drive, and mile-based auto insurance — pay-as-you-go auto insurance calculates your premiums based on the amount of miles you actually drive. Premium prices tend to be significantly lower than standard auto insurance, in some cases up to 50 percent off. The largest discounts are offered to people who drive less than 10,000 miles per year.
Proponents of pay-as-you-go auto insurance think it offers more choice for drivers, especially those who don’t drive often. Environmentalists feel it incentivizes driving less often which helps reduce carbon emissions.
Who is Pay-As-You-Go Insurance Right For?
In general, anyone who drives infrequently may benefit from pay-as-you-go auto insurance. This includes students who may live on a college campus or people who sometimes use public transit. People who work from home and don’t drive often, in general, may also want to consider it. It’s also great for parents of teenagers as a potentially easy way to save on auto insurance for a new driver.
It’s important to note that not every major insurer offers pay-as-you-go insurance. You may need to talk to an independent insurance agent who works with lesser known, but still high quality insurance providers. It’s here that most customers get the most choice in their insurance coverage.
Concerns About Pay-As-You-Go Auto Insurance
The big concern for most consumers is how miles are tracked to verify the correct premium. Most insurance companies require drivers to install a GPS tracker in their vehicle. This can feel invasive to some people, which causes them to avoid considering this auto insurance as an option.
The trackers also track other driver behavior, like speeding, which is concerning for many drivers. If you’re deemed to be an unsafe driver, it could impact your premiums, regardless of the amount of miles you drive each year.
Pay-as-you-go auto insurance won’t work for every driver. If you like to take road trips, have a long commute, or spend a lot of time shuttling other people to and from different places, stick with standard auto insurance. But if you divide your commute between driving and public transportation, you drive infrequently, or you only drive a few miles a day, pay-as-you-go may be perfect for you. Contact Charlotte Insurance today to learn about your options!