Pay As You Drive Auto Insurance In California
Do you like the idea of Pay As Go Insurance? If you live in California, you may be able to do just that somewhere near the end of 2009.
How Does Pay As You Drive Work:
Insurers would offer an auto insurance plan based on the amount of mileage you drive during a particular policy term. This doesn’t mean all of the other variables like Age/Location/Sex/Driving History won’t be a factor - because they definitely will. What it does mean is that a traditional policy is billed for “unlimited miles”, and even though an insurance company is fairly sure you’re not going to be driving 900 miles per day 365 days a year, they still base their rates on you being on the road everyday to and from work, running errands, etc.
If the insurance company can give you a set number of miles to drive per month, they can calculate your risk factor. Obviously, the more you’re on the road, the higher your risk for an accident and subsequently - a claim.
How Would The Insurance Company Know How Many Miles I’ve Driven?
It’s fairly obvious that the only way you’re going to get a pay as you drive insurance plan would be if the insurance company underwriting your policy had access to your mileage.
As of now, it’s mostly just throwing ideas back and forth, but likely here’s how the insurance company will keep tabs on your driving.
- Electronic Transmitters: These have been used on a trial basis in certain states for a few years now. Much like a GPS, these transmitters send pertinent driving information to the insurance company.
- Locations: Auto repair shops, emissions testing shops, authorized insurance centers, etc.
At this moment, my money would be on the electronic transmitter.
Is Pay As You Go Insurance Right For Me?
Do you drive very little? Are your current auto insurance rates too high? Then possibly it could be. There really are so many other factors that go into determining your rate that savings may be minimal. For instance. If you’re with a smaller company (say you found them through an independent agent) and they are offering rates $200 less for the same insurance coverage for a 6 month policy, switching from that company to a major carrier like Allstate or State Farm, could actually cost you more. It doesn’t mean it will, but it definitely could if you’re a higher risk driver.
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