Pay As You Drive: The Way Forward?

As the number of drivers carries on increasing we all realise how vital it is to have good car insurance In the United Kingdom it is an offense to drive an uninsured vehicle Car insurance rates do not change much depending on the amount of driving you do. Quite often these rates seem unjustly high.

Even if your car insurance is paid monthly instead of annually, the premiums still make a difference in your monthly budget. A new form of car insurance has entered in the market Called Pay As You Drive Insurance it offers advantages and savings to particular drivers.

Pay As You Drive Insurance insurance uses the amount of time you spend driving your car to determine how much you pay. Basically the more you drive your car the more you pay for insurance. Except the actual level of car use, the premium rate is based on the type of driver, and the amount of danger involved during driving.

Because it effectively causes an owner to drive his car less, environmentalists find PAYD insurance to be very attractive. This also gives you incentive to drive more cautiously. As a result this decreases the chance of an accident

Most Pay As You Drive insurances use the reading on the car’s odometer to determine the mileage the car has traveled in the past year. The insurance rate is then calculated based on that figure. Advanced forms of insurance plans include a job profile and other risk factors.

Certain Pay as you Drive insurers, such as UK’s Coverbox Pay As You Drive, additionally use a Global Positioning Satellite (GPS) based system to keep track of the car. At anytime this allows them to calculate the mileage used. When the car is being used can also be noted, so lower rates can be given if the car is driven at times when statistically fewer accidents occur. Particular driving groups can have a set premium related to a certain time. For example, Coverbox adjusts its insurance rates between the hours of 11 p.m. and 6 a.m. to its highest prices for young drivers. This is when most have accidents. The GPS navigation device can additionally serve as a form of security, helping to locate the vehicle quite simply if it ever gets stolen.

One of the problems with GPS tracking as viewed by those being tracked, is that they worry about offences such as speeding, which could later be passed on to police. While the PAYD firms claim they’d never perform this and that the information they gather is done so anonymously, they haven’t convinced a lot of cynical prospective clients.

Examples of PAYD insurance programs include UK’s Coverbox, Australia’s Real Insurance, and Japan’s AIOI which is partnered with GMAC, IRIS, and Toyota. The majority of these insurance policies are either tentative or have been taken off the market due to low demand. But, there are proposals to re-launch PAYD type insurance policies for autos because they are advantageous to drivers as well as the environment.

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