The pay as you go cell phone plans are so convenient and that leads us to think that why there is not anything like pay-as-you-drive insurance plan? While it seems like one great idea, the real thought would be whether this would work.
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Is There Anything Like a Pay-as-you-go Car Insurance?
The pay as you go cell phone plans are so convenient and that leads us to think that why there is not anything like pay-as-you-drive insurance plan? While it seems like one great idea, the real thought would be whether this would work.
The concept is very simple. You drive more, you pay more insurance premiums and you drive less, you pay less. People who stand by this kind of insurance plan have the opinion that this is a very advantageous program.
What is the point in paying so high insurance premiums when you do not even drive your car that much, after all? However, with this plan, you have to pay only as much as you drive.
Many people who have retired from their jobs are now enjoying the better things in life own winter homes in places with temperate climates for example, in Arizona or in Florida. They might spend six months in say Toronto and six months in their winter home. Such people can benefit from this plan.
The insurance agencies can set the average amount of driving according to the type of the car. Then they can break the payments down to certain cents for every mile. Therefore, you can buy a preset amount of miles through the pay-as-you-go insurance plan.
This is an excellent option for people who tend not to use the car a lot or go for other cost saving or environment friendly alternatives. While this kind of plan is not yet in action, it has certainly found several supporters all over the US in several states.
Certain groups including the Conservation Law Foundation, U.S. Environmental Protection Agency, Environmental Defense are some of the groups that are working towards organising a nationwide cooperative. This cooperative will work with the insurance companies offering huge discounts to low-mileage drivers.
The middle of 2004 saw General Motors Acceptance Corporation or GMAC Insurance offering discounts based on low-mileage to consumers who used OnStar in a few states.
OnStar system records the odometer readings of a vehicle at the policy term's start and end, thereby verifying the mileage. They issued discounts on insurance premiums as high as 40%. The pay-as-you-drive or PAYD programs work in Israel, Holland and South Africa. It is becoming popular.
However, the question still remains if it will be able to enter the UK, which is the biggest market of car insurance. While debates have been undertaken and concepts have been forwarded, nothing seems to be approved yet.
May be the insurance industry simply finds that it has a lot to lose in this plan and therefore, they are try to put it off for some time. However, as other countries embrace this new plan, UK will soon have to join in.
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