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Thursday, February 26, 2009

Advantages Pay as You Drive Insurance

By Tom Martens

Insurance premiums are usually based on factors such as a driver?s gender, age and where they live. But Pay As You Drive insurance is different because it is based on the number of miles you drive. The less you drive, the less you pay.

The obvious advantage of Pay As You Drive coverage is its lower cost. Since the premiums you pay are calculated on the basis of how many miles you drive, reducing your monthly insurance payment is a snap. Just drive fewer miles. Not only will you pay less for your policy, you will pay less for fuel and maintenance. The fewer miles you drive, the less wear and tear, and the greater likelihood you will be able to keep your car long after you make the last payment. And with the cost of new and used vehicles going up all the time, having a car without a payment is a major incentive.

The less obvious advantage of Pay As You Drive coverage is that you can tailor your program to your specific driving needs. Premiums under these plans are either computed on the basis of miles driven, or on the basis of hours driven. You can choose a Pay As You Drive policy that focuses on total miles, or total hours in a specific time period, such as six months. Pay As You Drive coverage offers you the flexibility and freedom you need to choose exactly the coverage you need, and to get it at a lower cost as you economize.

Another factor in the low cost of Pay As You Drive is the fewer miles driven, the lower the risk of a crash. Low-mileage drivers are typically more focused and careful behind the wheel, and the lower premiums for Pay As You Drive incentivize this quality.

Mileage monitoring is required with Pay As You Drive insurance, but there are plenty of options for drivers. You can have certified odometer readings, much like you do when you have your vehicle?s safety inspection. Or you can have a GPS based monitor installed in your vehicle, or you can simply have the computer data uploaded from your vehicle. Since only periodic mileage readings are needed to track the mileage for Pay As You Drive insurance, the cost associated with mileage monitoring will most likely be offset by the money you save in insurance premiums.

The Brookings Institute found that two-thirds of American households would save an average of $270 per year with Pay As You Drive. In the current economic situation, that is welcome news.

And not only does Pay As You Go save you money, it helps you save the environment. Fewer miles driven means fewer vehicles on the road. Fewer vehicles on the road means fewer greenhouse gas emissions, not mention less congestion, fewer traffic jams, and less time wasted sitting in traffic.

A close look finds many advantages to Pay As You Drive plans. Contact an authorized insurance broker for more details on a plan that best suits your individual needs.

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