Perhaps you’ve been hearing about one of the newest technological developments in the car insurance industry: pay-as-you-drive.
A device is installed in your vehicle that tracks how many miles you drive in the course of a month, how safely you drive, or a combination of both — depending on your insurance company. Several major providers such as Allstate, State Farm, and Progressive have already implemented this technology with some of their customers.
Here’s the low-down on this new type of car insurance:
The Perks of Pay-As-You Drive Insurance
- Those who drive very little will pay less
- Those who drive safely will be rewarded with discounted rates
- Parents will be able to track the driving habits of their teens
Because the device relays information back to your insurance provider about how frequently and far you drive, you’ll be charged less if you don’t use your car a lot. In the past, insurance companies billed their customers a flat rate based mostly on their vehicle safety and driving record, since exact mileage couldn’t be tracked. Those who drove very little were essentially paying for the high mileage of others. Clearly, the installation of a tracking device is a perk for those who drive fewer miles and want to take advantage of the savings.
These devices also track vehicle speeds and braking habits, which are two indicators of how safely motorists are driving. While insurance providers say there won’t be negative repercussions for speeding and slamming the brakes, drivers with safe habits will be rewarded in the form of discounted rates. If you’re a safe driver, you have nothing to lose and everything to gain (some insurers indicate up to 50% off your premiums).
While there are aspects of these devices that worry people leery of being tracked, there’s a distinct advantage for parents of teens who drive the family vehicles. Simply knowing that a vehicle is tracked should be enough to keep teens in line — but if not, parents will have indisputable evidence to help them provide feedback and talk with their children about safe driving. Potentially, reckless habits will be curtailed and tragic accidents avoided.
This concept can apply to us adults, as well. I’m sure that if I had a safety tracking device on my vehicle I’d be more conscientious about speeding — especially knowing that abiding by the law is saving me money.
These devices obviously aren’t for everyone, particularly if you’re paranoid. But continued advancements like these provide incentives to drive safely — which is to the advantage of car insurance providers, drivers, and even passengers. If you’re interested, check with your provider to see if this option is available in your state. If not, it probably will be soon.
Are you planning on taking advantage of pay-as-you-drive car insurance?
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