Disadvantages of Pay as You Drive Insurance
Pay As You Drive insurance is taking off in popularity. This insurance program is based on the number of miles you drive. The less you drive, the cheaper your insurance premiums. In the current tough economy, the idea of paying less for what can be a big expense is appealing. However, Pay As You Drive Insurance does have some disadvantages.
First off, if you use Pay As You Go, you have to allow your use of your car to be monitored. Monitoring your mileage is not free, and you pay those costs, not the insurance company. Especially if you have a GPS device installed, the costs of monitoring can be greater than the savings in your premiums. Moreover, if you change companies, you will have to change monitoring devices, too. That means you should think twice before you change companies just to get what appears to be a lower rate.
Secondly, the companies that make the odometer tracking devices also charge a periodic fee for transmitting data. So, not only do you pay for the device, you pay to use it. This, again, possibly can eat away any savings from driving less when you use Pay As You Go.
Third, the insurance companies have had an opportunity to develop a completely new price structure when they offered Pay As You Go. This has allowed them to pass off new costs to drivers, again, canceling out the benefits of your careful and frugal driving.
There are legitimate concerns about how your odometer data may be used. The devices that provide mileage numbers can be modified to tell you the company not just how many miles you drive, but where you drive, when you drive, and how often you go there. This information might be used to justify increasing your premiums, or it might be passed on to third parties for entirely different purposes, none of which is likely to be to your advantage.
Supporters of Pay As You Drive plans assert that driving less will result in fewer accidents. However, the correlation between miles driven and number of accidents is not necessarily simple. Low-mileage drivers are not necessarily safer drivers. It is just as easy for a Pay As You Drive driver to get into a crash as a driver covered by a more traditional insurance program.
On the surface, the cost savings of Pay As You Drive seem quite attractive. Drivers who are considering Pay As You Drive, however, should ask detailed questions before signing up for the plan. Gather as much information as you can to determine whether Pay As You Go is really right for you. - 21396
First off, if you use Pay As You Go, you have to allow your use of your car to be monitored. Monitoring your mileage is not free, and you pay those costs, not the insurance company. Especially if you have a GPS device installed, the costs of monitoring can be greater than the savings in your premiums. Moreover, if you change companies, you will have to change monitoring devices, too. That means you should think twice before you change companies just to get what appears to be a lower rate.
Secondly, the companies that make the odometer tracking devices also charge a periodic fee for transmitting data. So, not only do you pay for the device, you pay to use it. This, again, possibly can eat away any savings from driving less when you use Pay As You Go.
Third, the insurance companies have had an opportunity to develop a completely new price structure when they offered Pay As You Go. This has allowed them to pass off new costs to drivers, again, canceling out the benefits of your careful and frugal driving.
There are legitimate concerns about how your odometer data may be used. The devices that provide mileage numbers can be modified to tell you the company not just how many miles you drive, but where you drive, when you drive, and how often you go there. This information might be used to justify increasing your premiums, or it might be passed on to third parties for entirely different purposes, none of which is likely to be to your advantage.
Supporters of Pay As You Drive plans assert that driving less will result in fewer accidents. However, the correlation between miles driven and number of accidents is not necessarily simple. Low-mileage drivers are not necessarily safer drivers. It is just as easy for a Pay As You Drive driver to get into a crash as a driver covered by a more traditional insurance program.
On the surface, the cost savings of Pay As You Drive seem quite attractive. Drivers who are considering Pay As You Drive, however, should ask detailed questions before signing up for the plan. Gather as much information as you can to determine whether Pay As You Go is really right for you. - 21396
About the Author:
Tom Martens is the content syndication coordinator for Carinsurancesa.co.za. South Arica?s leading car insurance portal.
posted by X - Men @ 6:49 AM
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