Pros and Cons of Pay as You Drive Insurance

There are many pros and cons of pay as you drive insurance. This type of policy is a good choice for some drivers, but a big mistake for others. Once you compare the good and the bad you will have a better idea of what you are getting into if you decide to rely on this type of coverage. Pay as you drive insurance is being offered in 13 states in the United States. The program is being offered by Progressive Casualty Insurance Company as well as GMAC Insurance. There are several other insurance companies that are experimenting with pay as you drive insurance to determine if they want to start offering the coverage. The way that this type of insurance works is simple. A tracking device is installed in your vehicle, which then transmits the number of miles traveled back to the insurance company. Along with this, the device is also able to detect poor driving habits and location.

Pros of Pay as you Drive Insurance

One of the biggest benefits of pay as you drive insurance is the large discounts being offered by providers. For low mileage drivers, savings of up to 50 percent are more than possible. Some companies are also offering immediate discounts for simply enrolling in the program.

Since the program came into effect, teenage drivers have found that pay as you drive insurance is a great way to save money – sometimes as much as 40 percent on a single policy. This is something that many parents should consider if they are looking to save on the cost of coverage.

Cons of Pay as you Drive Insurance

The biggest drawback is that you are going to install a device in your vehicle which is meant to share information with your insurance company. Many drivers see this as an invasion of privacy. They do not want their insurance provider knowing where they are, as well as how they are driving.

In many cases, the best rates for pay as you drive insurance policies are available to those who drive less than 10,000 miles per year. Although this includes a large group of people, it does not include the majority of drivers. The biggest discounts are available for those who drive less. There are fees that you need to be aware of. Most commonly, if you exceed the amount of miles in your program you are going to be charged additional money. Before signing up for any pay as you drive policy it is important to know the terms and conditions, as well as when additional fees will be tacked on.

When deciding whether you want to buy pay as you drive insurance, consumers should consider both the pros and cons. By doing so you will be able to make an informed decision on whether to keep your conventional coverage or make a change.   

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