What Are Pay As You Go Car Insurance Programs?

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by: alisdair
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Many auto insurance companies have tried to find ways to respond to the changing needs of consumers, over the years. As gas prices continue to soar through the roof, all across the country consumers are desperately looking for ways to save money when fueling their cars. Our finances are now tightly bound by many consumer goods, and among them is the soaring price of gasoline and the costs involved with paying auto insurance. Insurance companies have responded by creating a new insurance program known as a pay as you drive program that could provide policy holders some financial relief.

The pay as you go program is officially called Environmental Defense and its purpose is to track an individual’s car mileage. There are two proposed ways to accomplish this. One method is done by installing a proprietary odometer that contains an embedded cell phone that periodically calls in your mileage to your insurance company.

Another method of tracking an individual’s car mileage involves the installation of a GPS device into a phone in your car, kind of like the On Star system to show the actual travel route taken. You may need some more information to help you decide which of these methods may work for you.

There are some consumers who feel that the GPS system imposes on their right to privacy so they do not want it for this reason. Using the GPS method has its advantages, however, as it not only keeps track of the mileage but it also advises the time to travel and the route to follow. You should make a comparison of the concerns for privacy and the probable benefits of each method.

Since the insurance companies will be offering a financial incentive for driving less, the Environmental Defense thinks that a pay as you drive program will eventually save the consumers money as well as helping to reduce pollution. One benefit of the pay as you drive program would be a reduction in the number of drivers from the already congested streets and highways of the cities where traffic can be a tremendous problem.

The pay as you drive insurance programs could make auto insurance more affordable by giving the consumers more control over their auto insurance premiums.

You can easily determine how cost effective a pay as you drive program can be for you. A part of your annual premium rate would be charged into a per mile fee by assigning your car to a group, according to vehicle type and usage and your zip code. When the per mile rate is determined you may have to pay an upfront fee for your pre-determined mileage. The determining factor of whether you receive a rebate or have to pay more is the amount of time you spend driving your vehicle.

There have been estimates of a possible savings of up to twenty-five percent that some policy holders can have on their auto insurance when using this type of program.

If the pay as you drive program can actually save you money and cut down on pollution and congested driving conditions, it may be the big wave of the future.

Article Source: http://articles-collections.com

About the Author

Alisdair Cosgrove has been writing personal finance articles for many years and can find more of his work at the UK site TheMoneyStop.co.uk, offering online car insurance quotes and other insurance products including {{{cheap home insurance|cheap travel insurance|life insurance. There is also many informative insurance articles including

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