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Is 'pay As You Drive' Cheap Car Insurance?

Is 'pay As You Drive' Cheap Car Insurance?

'Pay As You Drive' car insurance has become quite the popular choice recently for many drivers

. In fact, it is the first product on the market that takes advantage of the high technology available today that actually benefits both parties, consumer and provider. A device is placed in your vehicle monitoring your driving habits.

Traditional insurance policies have a fixed monthly premium based on a number of factors. These include the estimated yearly mileage, what type of car, what type of driving it is used for, where it is parked and if it has safety features like anti-theft devices. Traditional policies take into account the actual risk a particular driver may have of being in an accident, also based on a number of factors such as driving routes, usage, car age and type plus more.

'Pay As You Drive' policies take a uniquely personalised approach toward premium setting. The premium is based on the factors including how much, where and when you drive every month. For example, if you were to spend many weekends during nice weather motoring in the country, you bill would be higher than perhaps winter months when weekends were spent at home. Obviously, if you were to take an extended holiday on the road, the premium for that month would be higher than others. You also are charged each month based on the hours of the day you drive, road conditions as well as the mileage you accumulate.

If you decide to go with a 'Pay As You Drive' policy, the provider installs a device in an inconspicuous location in your vehicle to monitor your driving. This device is actually a small GPS electronic item recording you r driving habits that will determine your monthly insurance bill. The device 'knows' what time a day you are driving, where you go and how many miles you travel.

This information is transmitted to you provider who, in turn, sends you an itemised bill detailing the charges for that month. There also will be a fee for cover such as physical damage, fire and theft. This amount is constant. Obviously, your mileage charge will vary depending on how much driving activity happens in a particular billing cycle.

This unique type of insurance takes into account the traditional policy considerations along with your personal driving habits. There are also two age-pricing tiers - 18 to 23 year olds and drivers older. Younger drivers do pay more. But, a typical drive can look to pay about an 11pounds per month flat rate and then will pay anywhere from .41p to 4.63p for each mile based on the type of road and time of day.

This can be the cheapest car insurance for drivers who do not accumulate a great deal of miles. People with low mileage driving habits would do well switching to a 'Pay As You Drive' policy. There are companies stating that drivers who tally 6,000 miles or less per year can save as much as 30 percent by switching to a 'Pay As You Drive' policy.

by: Tom Jones
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Is 'pay As You Drive' Cheap Car Insurance?