If you have been struggling with high car insurance rates, you may be considering switching to a per-mile plan. So far these pay as you go auto insurance policies are only available in a handful of states, but some drivers are already saving a lot of money.
So, should you consider a per-mile plan or look for ways to save on your existing policy? The answer to that question depends on a number of factors, not just how many miles you drive. If you are considering such a policy, you will need to look at the quality of the companies offering the plans, the bottom-line savings and the amount of coverage you are actually getting.
Here, Major Insurance, founder of the Safe Drive Scholarship, discusses whether pay-per-mile insurance could be the right choice for you:
Privacy Concerns
One concern some drivers may have about paying by the mile is privacy. When you sign up for a per-mile policy, the insurance company does not simply take your word for it – you must install a tracking device on your vehicle.
That tracking device reports the number of miles you drive back to the insurance company, keeping you honest and keeping the company informed. Just as importantly, these tracking devices can detect unsafe driving behaviors, and that could impact your rate going forward.
Those privacy concerns are certainly valid, although they may become lessened in the future. Modern vehicles are already able to detect a wide variety of driving behaviors. Some even come equipped with airplane-style black boxes that can be examined in the aftermath of a crash. Opting for a per-mile insurance policy may push the privacy concerns a bit, but these tracking mechanisms are probably coming no matter how you choose to insure your vehicle.
The Benefits of Paying by the Mile
The biggest benefit of paying by the mile is the savings, and those savings can be substantial for drivers who use their cars rarely or enjoy a short commute to work. Retirees, business owners who work from home and workers who use public transportation all stand to benefit from the pay-per-mile model.
Depending on where they live and the number of miles they drive, vehicle owners could save as much as 50% over their current insurance plans. Those are compelling savings, and one of the biggest benefits drivers can enjoy.
New drivers also stand to benefit from the pay-per-mile business model, especially if they are good drivers. Since the mileage tracking devices also track driving behavior, responsible teenager drivers – and their parents – could see a big reduction in their insurance costs.
As stated earlier, the biggest drawback to pay-per-mile car insurance is the presence of the tracking device. Some drivers simply are not comfortable having a tracking device in their vehicles, while others worry that the device could erroneously report bad driving behavior. Drivers with those concerns should do their homework and weigh the benefit of lower rates against the potential privacy issues.
Drivers who are conserving a per-mile automobile insurance policy should also compare rates against what their current carriers are offering. Changing car insurance companies can be a complicated and time-consuming process, so drivers should always check with their current carrier first.
Many mainstream insurance companies offer similar discounts for low-mileage drivers. Major Insurance offers a scholarship to young drivers who practice safe driving habits. If the number of miles you drive annually has dropped since you initiated your policy, you might be able to get a substantial discount without changing carriers or moving to the new per-mile coverage model.
