Drivers who are no longer using their vehicles as much as they used before, can save some money when getting a car insurance policy. Paying for a full coverage auto insurance policy doesn't make sense for these drivers. However, since it is required by law, cutting out car insurance entirely from their expenses is not an option for these drivers. By making use of telematics technology, pay-per-mile insurance helps policyholders and car-owners with their problems on expenses by introducing an option that lets them pay for their insurance rates based on how much they use their cars.
Before getting pay-per-mile insurance, drivers should consider the following:
How the rates are determined. Pay-per-mile insurance charges the policyholders only for the miles they drove. Many of them are already saving 25%-40% on their auto insurance premiums. Usually, drivers who are driving for less than 500 miles per month should consider getting this type of insurance.
It's not a new concept. Back in the mid-1980s, the National Organization for Women filed a class-action lawsuit against the car insurance industry, claiming discrimination. They claimed that car insurance providers were charging more for policies covering women drivers, even though statically, women have fewer accidents. As it turns out, the reason is not that women are naturally safer behind the wheel than their male counterparts. The reason is that women drive less.
It's a win-win situation. Policyholders who drive their cars for less than 2,000 miles per year can get incredibly cheap policies and the insurance company can still make a profit. It also benefits the insurance companies because pay-per-mile car insurance would ensure that those who drive less will not be forced to "maximize" their policies by using their car more, in turn causing more accidents, which will mean costs for the company. Of course, there is always the issue of fraud. However, insurance companies have some solutions for that. Some companies are asking their customers to send in photographs of their odometer settings from time to time.
It's a green idea. Pay-per-mile insurance can encourage people to drive less, saving on resources and resulting in cleaner air.
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