Understanding the Concept of Pay As You Drive Insurance

There are insurance plans that propose different car insurance premium rates according to one’s manner of driving. This is called the Pay As You Drive Car Insurance Plan. If you’re a careful and conscientious driver, you would most likely get a favourable interest rate upon renewal of your car insurance. If you’re a hasty and irresponsible driver, then you can expect to have a more costly car insurance premium. Basically, this kind of car insurance is largely dictated by one’s driving habits. So if you like the rush and the thrill of driving at fast speeds, beating the red light, and somehow doing some unnecessary driving stunts, your insurance company will surely let you pay a bit more for car insurance. The question now is, how will they know how you have been driving your car around?

How Insurance Companies Monitor Driving Habits

Nowadays, those insurance companies that offer a pay as you drive car insurance plan are keeping track of their clients’ driving habits by means of board computers that are pegged into the internal computer system of your car. This system reflects your way of driving to the central database of your insurance company through a GPS technology.

Monitoring Has Already Been In Effect

This system of monitoring by insurance companies has already been tested by several insurance companies in the US. It has also been given approval by a couple of states. A specific product, referred to as a Snapshot product, has been established by Progressive insurance. This product, which is the Progressive computer, is a device that attaches to the car’s onboard computer system found just inside the engine compartment. It then keeps track of one’s manner of driving. State Far has been considering this kind of program, while also looking into the possibility of using GPS.

Way Of Driving In Relation To Accidents

A lot of drivers are not too honest about their driving habits. They don’t exactly give precise reports to the insurance company when asked about the number of miles they drive each year. If you usually have a long drive going to your office or to other usual destinations, it is very likely for you not to report the correct number of miles. However, concealing truthful facts from your insurance company will haunt you in the long run. There has been a study by the Conservation Law Foundation which indicated that car insurance premiums based mainly on the number of miles driven could lead to an end on low mileage drivers making up for the expenses from accidents brought about by drivers with higher mileage. The study likewise discovered that basing the car insurance premium solely on a per mile usage would decrease the total number of miles that a car has been driven. It also discerned that fuel and accident costs reduced by around 10%.

Invasion of One’s Privacy?

A particular downside to the program, as felt by most drivers, is that their privacy might be sacrificed as a result of the close monitoring on their driving patterns.
Drivers might have to look closely into this kind of insurance and determine if the trade-offs are worth it and would offer more benefits in the long run.

Flicker Photo Credit: F.d.W.