Posted: Wed Aug 20, 2008 2:42 pm Post subject: what is pay as you drive insurance
Hey guys I recently came across this topic on net and I should admit that it sounded as a really cool thing to do.Can you people tell me whether it is in motion in any of the states or is it just a policy in draft ?I read it can actually help in reducing the green house gas emissions and curbing pollution? what do you say guys ?
I don't think pay as you drive will help much with pollution or green house gas. I can't see why it would. More people would most likely just drive for the money, which means more gas. ((Unless they have a hybrid or smartcar.))
Hi guys,
For an usual auto insurance policy it is not possible to bridge the gap between risks associated with the long distance drivers & the short-distance drivers. This would clearly state that the less distance a policy holder covers, he'd have to pay lesser in terms of premium. Insurers would offer you coverage on a rate per mile which shows up on the odometer & involves all the factors that count upon a traditional premium structure.
This would enable you to cut down your insurance costs over all. The distance to be covered by you would be tracked in a black-box which is connected with different inland satellites. Regards, ArindamSenIndies
The simplest form of usage based insurance bases the insurance costs simply on the number of miles driven. However, the general concept of Pay As You Drive includes any scheme where the insurance costs may depend not just on how much you drive but how, where and when you drive.
Pay as you drive (PAYD) means that the insurance premium is calculated dynamically, typically according to the amount you drive. There are two types of usage based insurance:
1. Cover is based on the odometer reading of the vehicle.
2. Driving is monitored using a secure black-box device in the vehicle, linked to a national network of satellites and data recorders.
The formula can be a simple function of the number of miles you drive, or can vary according to the type of driving or the identity of the driver. Once the basic scheme is in place, it is possible to add further details, such as an extra risk premium if someone drives too long without a break, uses their mobile phone while driving, or travels at an excessive speed.
Insurance companies have always tried to differentiate and reward "safe" drivers, giving them lower premiums and/or a no-claims bonus. However, conventional differentiation is a reflection of past history rather than present patterns of behaviour. This means that it may take a long time before safer (or more reckless) patterns of driving and changes in lifestyle feed through into premiums.
PAYD policy can prove useful to people who drive occasionally, for them PAYD is the right option.
Even now the insurers offer discounts for lower mileage, but that's not proportional to the mileage driven by the driver, but a static incentive for driving less. This new type of plan can actually earn you the amount of discount proportional to the miles driven by you.
Currently the insurers have to policy to distinguish between the drivers, driving lesser miles and drivers with high mileage, but are distributing the risks amongst the driver's community. Hence, an occasional driver also ends up paying higher premium.
Paid-as-You-Drive plans can do justice this way to the drivers driving lesser miles.
