Pay as You Drive Insurance: Pros and Cons

Lots of drivers are looking at a new kind of policy offering called pay as you drive insurance to stay on the road for less money. This kind of insurance relies on new technology that helps insurers give consumers more precision in what they pay for. The general type of pay as you drive insurance that is currently on the market comes with some very specific benefits and drawbacks. Here are some of the major pros and cons of going with a pay as you drive insurance policy, where insurers use mileage checks to identify actual use and charge accordingly.

Pros

• Tailored Coverage - To lots of drivers fed up with sky-high insurance rates, pay as you drive options make perfect sense. Why pay for endless mileage if you are not going to use it? This idea makes pay as you drive a compelling option for lots of individuals and families who have access to it, and a common way to cut costs as insurance premiums of all kinds consistently go up over time.
• Perfect for Limited Income Seniors and Others - A pay as you drive option is great for those who still have a vehicle, but don't use it daily to commute to work, and may not have the annual income to pay a lot in auto insurance.
• Keeping Track of Mileage - A pay as you drive option goes hand in hand with reducing your annual mileage. Consumers who are signed up with a pay as you drive option have a powerful incentive to limit their time on the road, and save even more in gasoline, engine wear and other associated costs.

Cons

• Expensive Hardware - Some pay as you drive insurance policies require additional hardware for monitoring mileage use. Drivers may have to share some of the costs of upgrading to a pay as you drive system.
• Privacy Concerns - The tracking devices some insurers employ for pay as you drive insurance allow the insurer to know where a driver is at all times. Some consumers uncomfortable with this format may decline a pay as you drive policy for this reason.
• Driving to Assessment Stations - If a pay as you drive option does not include hardware such as a GPS, an alternative is for the driver to periodically visit an assessment station where observers check the vehicle's mileage physically. This may cause a driver to cover additional miles just to comply with mileage checks.
• Additional Mileage - Because a pay as you drive system relies on mileage checks, going over on mileage can really hurt a policy holder. Insurers will generally charge a large surcharge if the vehicle is driven more than the agreed on mileage.

All of the above are things that drivers can consider when looking at new pay as you drive auto insurance options. For some drivers, these are great money savers. for others, they represent very unappealing offers. Take a thorough look at all of the options offered by your local insurers to know where you stand regarding a pay as you drive insurance policy.