When it comes to auto insurance, established standardized premiums typically take into account information about both the driver, as well as their automobile. However, new programs offer discounts based on how much, or how little, a person drives per year, which can serve to save significant amounts of money at the end of the year.
With the new “pay-as-you-drive” programs offered by various auto insurers, a retired person who drives to their local market and church only once a week would pay less than an employed person who drives to work daily, as well as on weekends. These types of programs also benefit customers who choose to utilize public transportation, as well as stay-at-home moms, who only drive for the carpool and soccer practice after school.
The new program also addresses discounts based on the distance a particular driver may cover. Typically, people benefiting from such a program drive less than 15,000 miles per year, which in today’s era of telecommuting, could account for a large number of people who work from home. In addition, certain “pay-as-you-go” programs use a GPS-type of device to track not only how many miles the vehicle is driven, but also take into account the braking and accelerating frequency of the driver.
One of the major insurance companies, Progressive, offers a “pay-as-you-drive” program called Snapshot, which provides “discounts of up to 30% per year off its regular car insurance rates.” The program takes into account the miles a car is driven, when the car is driven, and how it’s driven. Factors affecting an individual’s rates include driving during what is considered “peak time for accidents” (between midnight and 4 a.m.), as well as if the driver makes a lot of sudden stops and starts.
The Snapshot program is designed for vehicles built from 1996 to the present, as a monitoring device must be installed and cars built prior to 1996 are not compatible. The device monitors “mileage, the time of day when the car is driven, and driving style.” The program is currently available in 25 states, as each state sets its own insurance regulations, and the program must be approved by each state.
For anyone interested in “pay-as-you-go” programs, speak with your local auto insurance agent, and let them compare your existing policy with the options the new program offers. There’s a good possibility that you – and your wallet – will be glad you did.