Pay As You Go Car Insurance

The changing consumer needs have been what many car insurance companies have looked for ways to respond to over the years. Ways to save money on soaring gas prices is what consumers all across the country are desperately seeking. 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 car insurance. A new insurance program known as a pay as you drive program which may be able to offer drivers some relief on their finances, has been the response of some insurance companies.  

The pay as you go program is officially called Environmental Defense and its purpose is to track an individual's car mileage. In order to accomplish this there are two proposed ways. The installation of a proprietary odometer that has an embedded cell phone that calls in your mileage to your insurance company from time to time.   

One other method of tracking your travel route to report the mileage involves installing a GPS device into a phone in the car, just as the On Star system works. You could probably use a little more information before you make a decision on which method is the one for you.   

An imposition on their right to privacy, is one objection to the GPS system that some consumers have. The GPS device has certain advantages over the propriety odometer method of tracking mileage because it not only keeps the mileage count, it also pinpoints your time and route of travel. So you need to weigh your privacy concerns against the potential benefits.

The Environmental Defense believes that a pay as you drive program would save consumers money in the long run, and help reduce pollution, as the insurance companies will offer you a financial incentive for driving less. A reduction in congestion in the overcrowded highways of the cities could be brought about by a reduced number of drivers, so this could be a potential benefit of the pay as you drive program.   

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

A pay as you drive program can be simple to judge on how cost effective it is. 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 a per mile rate is determined, you may be responsible for paying an upfront fee for your pre-determined mileage. The amount of time you have spent driving your car will determine whether you are to receive a rebate or have to pay more for your car insurance.     

It is estimated that this type of program could end up saving some policy holders up to 25 percent on their auto insurance premiums.

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.