The Brookings Institution reports studies finding that 2 out of every 3 American households would save money if they switched to Pay As You Drive auto coverage, with an average savings of $270 per year. Pay As You Drive insurance, as its name suggests, is priced on the basis of the number of miles you drive. These plans give you a real reason to drive less and save more.
Anyone can consider switching to a Pay As You Drive insurance program, but these programs really benefit low income and low mileage drivers. Low income drivers tend to also be low mileage drivers because of the high costs associated with frequent driving. While the amount of miles driven doesn?t impact premiums under a more traditional insurance program, high mileage driving does require spending more money on gasoline and auto maintenance and repairs. There is also more wear and tear on your vehicle, which means vehicles will need to be replaced more frequently.
Another attractive feature of Pay As You Drive is their fairness. Traditional plans charge the same premium to drivers with the same risk factors no matter how much they drive. Since drivers who drive more get into more crashes, drivers who drive less wind up paying higher premiums to make up the difference. Pay As You Drive removes this unfair subsidy and lets low-mileage drivers pay the lower premium rates they deserve.
However, low mileage drivers are not necessarily low income drivers. Many low mileage drivers spend less time in their vehicles because it is more cost effective and better for the environment. Fewer vehicles on the highways mean a reduction in auto emissions, as well as less traffic congestion. Drivers interested in protecting the environment would also benefit from a Pay As You Drive insurance program.
Is there anyone else who could benefit from Pay As You Drive? Drivers looking to cut their insurance outlays in tough economic times should also look at these plans. Computing premiums on the basis of miles driven gives a tangible incentive for driving less. And don’t forget, the less you drive, the less often you have to replace your vehicles. Cars tend to last longer if their drivers use them less.
Almost any driver can benefit from Pay As You Drive. If you are interested in learning more about how these plans can save you money, help save the environment, and save your having to buy a new car, see a qualified insurance broker. Your insurance agent can answer your questions and create just the right plan to help you maintain the coverage you need and save hundreds of dollars each year.
Tom Martens is the content syndication coordinator for Carinsurancesa.co.za. South Arica?s leading car insurance portal.
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