Photo by Mulad Pay As You Drive insurance is taking off in popularity. This insurance program is based on the number of miles you drive. The less you drive, the cheaper your insurance premiums. In the current tough economy, the idea of paying less for what can be a big expense is appealing.
However, Pay As You Drive Insurance does have some disadvantages.
First of all, in order to utilize Pay As You Drive insurance, you have to consent to having your vehicle’s mileage monitored. There are costs associated with these monitoring programs.
These costs are paid for by the driver, not the insurance provider. These costs could outweigh the potential savings gained from Pay As You Drive Insurance.
In addition, drivers would have to install a new monitoring device every time they change insurance providers. That makes Pay As You Drive insurance inconvenient, and it makes shopping for a better deal difficult and frustrating for drivers.
Second, the companies that make the odometer tracking devices often charge a monthly fee for transmitting the data. So, not only do drivers have to pay for the odometer tracking device to participate in a Pay As You Drive insurance program, but they will also have to pay additional fees.
Again, this could possibly strip away any savings benefits gained from Pay As You Drive insurance.
Third, the insurance companies have had an opportunity to develop a completely new price structure when they offered Pay As You Go. This has allowed them to pass off new costs to drivers, again, canceling out the benefits of your careful and frugal driving.
There are also concerns about how odometer data may be used. While it may be true that the monitoring devices will only provide the data needed to compute premiums, there is always the possibility that the monitors could be modified to tell the company not just how far you drive, but where, when, and how often.
This information about where you could go could then be used to raise your rates, or for some other purpose entirely.
Those who favor Pay As You Drive insurance claim that less driving will result in fewer vehicle accidents. However, the relationship between vehicle miles traveled and accidents isn’t entirely proportional.
Also, low mileage drivers are not necessarily safer, better drivers. A driver on a Pay As You Drive insurance program can just as easily have an accident as a driver who is on a more traditional insurance program.
At first glance, the promises of lower premiums for Pay As You Drive seem very attractive. If you are considering a Pay As You Drive policy, however, be sure to ask detailed questions of your authorized insurance agent to make sure Pay As You Drive is really right for you.
Tom Martens is the content syndication coordinator for Carinsurancesa.co.za. South Arica’s leading car insurance portal.
Related posts:
- 3 Ways to Save Money with Teenager Car Insurance
- How To Get Cheap Insurance for Young Drivers
- Classic Car Insurance Tips
- Car Insurance for Students
- Will You Be Able to Afford Young Drivers Car Insurance?
