Are you ready for pay as you go car insurance?
Filed under: Insurance, Transportation
Pay as you go isn't just for cell phones anymore, it turns out some auto insurance companies are switching to pay as you go plans in order to offer better rates to customers. Traditionally insurance rates are based on, among many things, the estimated miles that each driver will travel during a year. Many people argue that these estimates are inaccurate and that a pay as you go plan would provide consumers with an incentive to drive less. Legislation is currently underway in California to let insurance companies base rates on actual miles traveled it is estimated that it would be the equivalent of removing 10 million cars from the road!While California is only on the cusp of letting insurance providers make use of this information to determine what your premium will be at least one other company is already offering pay as you go insurance rates in several states. Progressive offers a My Rate program in four states and requires that users hook up a device to their car which tracks the miles traveled as well as how you drive to recalculate your rate every 6 months.
Both of these plans have some similarities, neither will track where you go with GPS and both of them are under fire by privacy groups. The programs differ in that the My Rate plan from Progressive tracks WHEN and HOW you drive in order to determine your insurance rate. In California, much to the chagrin of insurers, neither of these pieces of information can be tracked.
Personally I would much rather have a pay as you go plan set up like the California legislation since there are times that I drive like an extra in the latest Fast and Furious movie. Even though the Progressive plan gathers a little more data and would likely cost me more, I think overall most people will like it for one reason. By bringing in driving habits including style, time and distance, Progressive should theoretically be able to provide those of you who drive like your car is a bubble with a better price. Under this plan you won't be paying for those of us who drive more aggressively. If you aren't up for letting your insurance company have access to your driving information, all is well since the programs are voluntary. . . for now.
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Reader Comments (Page 1 of 1)
9-01-2008 @ 8:16AM
homer51106 said...
iNSURANCE COMPANIES WANT TO CONTROL THEIR RISK..MONITORING THEIR CLIENTS WOULD ALLOW THEM TO BE IN CONTROL OF OUR PERSONAL LIFE . THEY TRADE INFORMATION AND USE IT TO DETERMINE YOUR LEVEL OF RISK..THERE WOULD BE NO PROTECTIONS SINCE THEY WOULD ALWAYS KNOW WHERE WE ARE , WHERE WE GO ..IF THEY NEED TO KNOW HOW MANY MILES WE HAVE DRIVEN , ALL THEY NEED TO DO IS CHECK THE ODOMETER EACH TIME WE RENEW OUR POLICY .. IF THIS RUBBISH BEGINS THEN WELCOME TO THE AGE OF BIG BROTHER.. I HAVE NOT FORGOTTEN THE 2004 /2005 HURRICANE SEASONS..HOW SO MANY VICTIMS OF THE DISASTERS BECAME VICTIMS OF THE INSURANCE COMPANIES..TRUST THEM TO SAVE A BUCK ??,,,,NO THANKS !!
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9-01-2008 @ 2:52PM
Steve said...
The thought that this concept would be like removing 10 million cars from the road is just silly. A statistic that can only be shown on paper. People drive where they need to go. simple as that. Yes, it will lower rates for some - especially a clunker that sits mostly on the street. But for those who drive to work to work, your rates will go up. And what about the retired person who drives mostly during the non-compute times - when it is most safe - his rates will go up when he takes trips.
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9-01-2008 @ 2:52PM
Ray said...
Your absolutly correct homer,they start off slow and by the time we figure out what their actually doing were already screwed.
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9-01-2008 @ 2:52PM
krusty said...
yep- i agree with homer 100% this is a scam. like other control scams, it starts as an option then becomes law. besides ,the drivers that go 15 below will be rewarded for creating even more danger. i give it 5yrs till every insurance co. does it, and 10 yrs to become law. if it were up to insurance companies we'd all stand in 1 ft squares covered in pads never doing anything.
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9-01-2008 @ 2:52PM
Myron said...
I don't work as I am retired and frequently drive long distances to visit State parks and the like. This puts a lot of miles on my car driving on back roads. The way this insursnce article reads my insurance would go up even though I am not in the congestion of city traffic where most of the accidents happen
This isn't fair, keep it the way it is or get a socialist type of insurance.
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9-01-2008 @ 2:52PM
watdafuk said...
Good point homer,why can`t you just confirm the odometer reading with your agent or a regisered business the way you do with pictures when you insure a new car.
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9-01-2008 @ 3:01PM
No to higher rates said...
I can see where there may be greater exposure for potential accidents when a car is on the road for a greater number of miles throughout the year. And I can understand how that risk will increase the insurance companies' risk, making it appropiate for higher premiums for the liability coverage.
However, since the more miles that a car has been driven, the less the car becomes worth, the cars driven more miles each year should have a more rapid insurance premium decline for the comprehensive coverages suchas collision, theft and uninsured motorist. Unfortunately, I doubt the insurance companies with factor this into their rates.
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9-02-2008 @ 7:00AM
Gail said...
My insurance company already does this. I get a discount for driving less than 7500 miles a year.
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9-25-2008 @ 6:23AM
Gail said...
I should add that the insurance company sends me a letter each year asking me for the odometer reading. I fill in the blanks and send it back. I suppose it's an honor system. If you negotiate a lower premium based on miles driven, remember, when (if) you have an accident the adjuster looks at the odometer reading. If the numbers are a lot higher than you've reported, they might be entitled to deny the claim because of fraud or something. Honesty is the pest policy.
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11-12-2008 @ 10:46PM
Car Dealers said...
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