Pay as you go car insurance is a type of insurance program that adjusts the rates based on the number of miles that you actually drive. It is also referred to as a mileage discount and essentially rewards people who drive less with a significant amount of savings on their premium.
The idea behind this type of insurance was initially developed in the U.K. and then piloted in the US by Progressive, where it has now become a cornerstone insurance discount.
How it Works
Pay as you go car insurance works in two ways:
Each of the options will provide insurance discounts, but operate in a somewhat different manner:
Pay as You Go Insurance with an Installed Device
This option requires that you install a tracking device that can be removed and analyzed by the insurer from time to time. There are some who consider this invasive technology, since the device can not only measure mileage, but things such as speed, when you drive and braking patterns.
Pay as You Go Insurance Based on Telematics
This offers a low mileage discount, which is monitored by a program such as OnStar. With this option, the mileage on your vehicle is reported automatically. There is no other type of reporting required and no other data will be shared.
Benefits of Pay as You Go Insurance
There are a number of benefits offered by pay as you go insurance programs. You receive an insurance discount, which will lower your overall auto insurance costs. Additionally, this type of insurance will encourage you to drive less and drive green, which will reduce your total vehicle emissions and contribute to beneficial environmental efforts. However, the most appealing benefit offered by pay as you go insurance is that you can keep more money in your pockets due to the savings on your insurance premiums.
A Look at Progressive’s Snapshot Program
The Snapshot Program by Progressive is perhaps the most popular pay as you go insurance program available. In fact, it is the one that got the entire trend started. However, there is a bit more to his program than meets the idea and fully understanding how it works will let you know if it is something you want to participate in. While the savings of up to 30 percent on your premium may be appealing, if you don’t “play the game” right, you may wind up paying more.
You are a good fit for Progressive Snapshot if:
The Snapshot program is designed to focus on how you drive, how far you go and what time of day you drive. There are some devices that contain GPS technology and also record your location for development purposes only.
If you tend to drive more often or find yourself in stop and go traffic often, then this may not be the right savings program for you. Especially since, if you do this type of behavior often, your rates may actually be increased when your renewal comes up.
Learning all you can about the pay as you go insurance programs prior to signing up will help to save you quite a bit of frustration. While there are some people that these programs can benefit, you need to ensure that your driving behavior is appropriate – or be willing to modify how you drive – in order to save.