Information on Pay-Per-Mile Auto Insurance

Due to the exorbitant cost of gasoline these days, all drivers are looking for any way to save money. Some are taking public transportation, some are taking the bus, and some are even joining carpools. These things cut down on the gas we use, but they don’t help with our auto insurance premiums, we’re still paying the same high price every month. We just don’t know how to do anything about these costs, but our viking auto insurance companies are trying to help. They have offered discounted rates for those consumers that reduce their car usage.

Some insurance companies are offering discounts to people for reducing the use of their autos. There is an organization, the Environmental Defense, that is promoting the pay-as-you-drive (PAYD) program nationwide. This concept would link insurance policies to an odometer rather than just a renewal date on the calendar. PAYD feels that this would help save money for the consumers along with reducing pollution. PAYD provides financial incentive for consumers to drive less and is hoped to help reduce congestion by up to 12 percent.

PAYD makes auto insurance affordable to low-income drivers by giving them some control of the cost of their auto insurance. According to the National Organization of Women’s (NOW) Cents Per Mile group , low-income drivers usually are burdened with the higher insurance costs, which is not justified by their lower mileage. This often causes this category of drivers to not renew their auto policies. The new program will hopefully help this problem by lowering the amount of non-insured drivers while assisting in lowering the financial burden on low-income drivers.

In order to reduce mileage, PAYD has initiated two systems that could be used to keep track of a driver’s mileage use. One of these would be the installation of a odometer that has a cell phone inside that would call the insurance company with your mileage. The second would involve the installation of a GPS device in a phone to keep a record of your exact driving routes. The concept of these programs would have to be paid upfront by the insured after the annual insurance rate is partially converted into a per mile fee. After that the insurance company would put our auto into one of the rate groups depending on your zip code and usage. Then you would either receive a rebate or even have to pay more if you go over the miles set.

The two test programs are:

1) only owners of GM vehicles equipped with Onstar can participate, and it will give them the opportunity of saving hundreds of dollars depending on how many miles they drive annually. This program is only available in four states and the discounts are available only to drivers that drive less than 15,000 annually; and

2) this program is only for drivers in Minnesota that drive a model older than a 1996 car. It involves a small electronic device that is attached to the vehicle’s diagnostics port and detects how much the vehicle is used and when the vehicle is in use. The data is then used to determine the driver’s discount. This program may save as much as 25% on the car owner’s insurance. These two programs are very limited in who they help to lower their insurance premiums. The rest of us have to find other ways by comparing insurance premium costs online to try and find a lower rate than we are currently paying.

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