Pay As You Drive plans are one of the most popular innovations in auto insurance of 2009. As their name suggests, Pay As You Drive plans charge drivers on the basis of how many miles they drive. Drive less, save more. In tough economic times, the idea of reducing this one monthly bill almost all of us have to pay is very appealing. However, Pay As You Go has a downside.
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.
Thirdly, insurers have had to develop a totally new price structure in order to offer Pay As You Go. This makes it easier for them to pass new costs on to drivers, again, canceling out any benefit derived from your frugal driving.
Concerns have also been raised about the data gathered by the odometer tracking devices. Supporters of Pay As You Drive insurance claim the devices will only monitor the mileage necessary to compute the Pay As You Drive insurance premiums, but that could easily change. The devices could be revamped to gather additional data on drivers, including whether they drive, when and how often. This data could be then be passed along to the insurance providers, who could possibly use this information to justify rate increases for Pay As You Drive insurance premiums.
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.
On the surface, the cost savings of Pay As You Drive seem quite attractive. Drivers who are considering Pay As You Drive, however, should ask detailed questions before signing up for the plan. Gather as much information as you can to determine whether Pay As You Go is really right for you.
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.
Thirdly, insurers have had to develop a totally new price structure in order to offer Pay As You Go. This makes it easier for them to pass new costs on to drivers, again, canceling out any benefit derived from your frugal driving.
Concerns have also been raised about the data gathered by the odometer tracking devices. Supporters of Pay As You Drive insurance claim the devices will only monitor the mileage necessary to compute the Pay As You Drive insurance premiums, but that could easily change. The devices could be revamped to gather additional data on drivers, including whether they drive, when and how often. This data could be then be passed along to the insurance providers, who could possibly use this information to justify rate increases for Pay As You Drive insurance premiums.
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.
On the surface, the cost savings of Pay As You Drive seem quite attractive. Drivers who are considering Pay As You Drive, however, should ask detailed questions before signing up for the plan. Gather as much information as you can to determine whether Pay As You Go is really right for you.
About the Author:
Tom Martens is the content syndication coordinator for Carinsurancesa.co.za. South Arica?s leading car insurance portal.
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