With a cell phone plan, you can pay as you talk, so why not pay as you drive for car insurance? It sounds like a good idea, but would auto insurance that you pay for based on how much you drive work for you? Pay-as-you-drive car insurance is a simple idea. In essence, if you don't drive much, you won't have to pay a lot for insurance. People who support this kind of insurance policy think that it has a lot of good points. What if you ride the bus or share a ride to work? You don't drive your car very often, so why do you pay so much for insurance? With auto insurance premiums that are based on how much you drive, you could literally pay as you go.
This plan could also help retirees who spend part of the year in Florida or Arizona and the rest of the year in New York or Toronto. These people are called "snowbirds," and they spend six months of the year in Florida or Arizona and six months in New York or Toronto. Basically, the insurance companies would decide how much each type of car is driven on average. Then you could figure out how much it would cost per mile. If you wanted to use pay-as-you-drive car insurance, you could buy a certain number of miles and be insured for that amount of time.
You pay as you go. Auto insurance is a great idea for people who don't use their cars very often or who are looking for ways to save money or the environment. This kind of programme isn't available yet, but there are people in many states who want that to change soon. Groups like Environmental Defense, the Conservation Law Foundation, and even the U.S. Environmental Protection Agency are trying to set up a national cooperative that would work with insurance companies to offer deep discounts for low-mileage drivers. This is half a step toward PAYD (Pay As You Drive) insurance.
PAYD Rates are offered by both General Motors and On-Star. Around the middle of 2004, General Motors Acceptance Corporation (GMAC) Insurance started giving OnStar subscribers in some states discounts based on how much they drive. At the beginning and end of the policy term, the OnStar system sends the odometer readings to check the mileage. Drivers who drive less than a certain number of miles per year can get up to a 40% discount on their insurance premiums. There are also PAYD programmes in Israel, South Africa, and Holland right now. PAYD is getting more popular and will soon be in your area.
But will it ever come to the UK, which has the largest market for car insurance?
There have been a lot of discussions and ideas put forward, but none have been approved yet. People have talked about it and thought about it, but as far as UK drivers are concerned, that's as far as it's gone. Maybe the industry has too much to lose with this new way to save money, so it will be put off for a while. However, as pressure builds and other countries join the new scheme, it would be silly for the UK to stay behind.
