With the recession showing no signs of easing, customers are getting more calculated about the money they spend and on what, and this is why pay as you go car insurance is gaining more ground.

Previously, the headway on reducing expenditure in terms of car insurance was termed as being difficult as owning a car meant paying insurance, whether the car is driven or not. Nevertheless, this is no longer the cause of concern for consumers with the advent of “pay as you go car insurance” options.

This type of innovative insurance has been launched leading insurance companies and the others are in close following. Apart from USA, this is also available in other countries such as Japan, UK, Canada and Africa, amongst others.

The pay as you go car insurance uses the technological advancements of GPS technology to track distance travelled and even driving behavior such as repeated accelerations, and sudden stops and starts. The device is hardwired into the car to transmit information back to the insurance company, who then use the data to charge the customer.

Since the concept is fairly new, almost all the insurance companies levy good discounts for registration and subsequently to drivers with low mileage. Extra bonus discounts can be offered if the driver maintains excellent driving records.
This can be especially advantageous for people owning more than one car where one has lower mileage than the other.

An added health benefit comes from the fact that, as pay as you go car insurance is charged only when one drives their car, people are encouraged to walk or even avail public transportation. This also makes it a very lucrative option for students and for teenagers who can’t afford to pay large premiums.

The main disadvantage of this system is the loss of privacy as your every movement is tracked and this being only available to people who average less than 10,000 miles per year. The other variables of pay as you go car insurance programs is that the rates vary during the day, the initial cost of the installation of the device is high, and that if you were to exceed the delimited number of miles then you would have to pay penalty fees.

However, if thevariables are well managed, then pay as you go car insurance system s are excellent for people looking to save some money on insurance costs.

Filed Under Car insurance
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