Pay-as-you-drive Insurance Saves Money And Environment

By Author: Marcus Stalder
Total Articles: 491
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The idea behind pay-as-you-drive insurance is that, rather than simply estimate annual mileage, drivers will only pay for the exact amount of miles they are on the road. Currently, California law says that insurers are only allowed to demand estimates of projected mileage from drivers. People on both sides - insurers and drivers - argue that this system creates inaccuracies and often ends up charging consumers far too much.
Rather than punish them, consumer advocates and environmentalists have put forth the notion that pay-as-you-drive will reward people who drive less and make drivers conscious of their miles and the true cost of being on the road.
The benefits are many:
- Up to 45% savings for driving 2,000 annual miles or less
- Fewer asthma problems and asthma-related absences from work and school
- Fewer collisions
- More money for California consumers to spend elsewhere
It works like this:
1. First, you supply the insurance company with an accurate reading of your current mileage.
2. Either an insurance agent or a third-party (like a service station, Carfax, or state ...
... agency) will check your mileage for each subsequent billing period.
3. You, the policyholder, will be either charged per every single mile that you have accrued for that billing period, or charged per every increment of 100 or 500 miles.
***If you have OnStar, your mileage can be automatically transmitted to your insurance company, saving even more time. It may also be possible to install an automatic mileage transmitter.***
Some are skeptical
Some in the insurance industry believe that this is simply too much hassle for more policyholders and that it uses up too many resources from insurance companies. These people believe that this experiment is destined to fail.
Some people have even argued that this will drive up the premiums for the rest of drivers who have to commute to work.
While most environmentalists back pay-as-you-drive, many point out that a small difference in mileage has very little impact on climate change. They see lots of effort being put into a small difference, when simply eating less meat and using fewer animal products would have a gigantic impact.
Extra Bonuses
If this insurance succeeds, it may lead to:
- Gas savings being spent elsewhere, thus improving the economy
- Better air quality and improved human health
- Long lives for automobiles
Participating Insurers
So far, only State Farm and The Auto Club are offering pay-as-you-drive car insurance in California. The smaller insurers are watching the bigger companies test the waters before they take the financial plunge.
What about your state?
If pay-as-you-drive is successful in California, there is a chance that national insurers like State Farm could push to offer it in other states. There have long been debates across the country about this, but the states with the most real chance of having this are the most eco-conscious. Green-leaning states like New York and Vermont may be next.
In the mean time
You can still get low mileage discounts on your car insurance without pay-as-you-drive. Save big on premiums by lowering your mileage so you can give a lower estimate, and add that to the savings you get from using free online car insurance quotes.