Over the past several years, several car insurance companies have started offering a pay-as-you-drive or a PAYD car insurance plan to drivers who want to save money on their car insurance. With the pay-as-you-drive model, drivers must agree to allow their car insurance company to monitor their mileage and driving habits with the hope of receiving a tremendous discount on their car insurance premiums.
What type of driving data car insurance companies monitor depends on what type of device the company uses to monitor drivers’ driving habits. Each car insurance company uses a different device. Several car insurance companies are using a device similar to Progressive’s plug ‘n play device. This company’s device is plugged directly into the car’s diagnostic system. Other companies who offer a PAYD car insurance plan rely strictly on information transmitted from a pre-installed device like On-Star or Sync. Companies that use pre-installed devices only monitor mileage. However, car insurance companies that use a plug ‘n play devices monitor a driver’s hours of operation, speed and braking patterns.
The PAYD car insurance model may definitely be the wave of the future for car insurance companies, but right now the program is only helpful for drivers who do not do too much driving. Even though several car insurance companies now offer the PAYD car insurance plans, many companies are not yet offering this option to their insureds. Progressive has had great success with its pay-as-you-drive car insurance model and promises savings of up to 50 percent to drivers who sign up and are determined to be eligible for a discount.
Many drivers who are looking to reduce their high car insurance premiums have signed up for the Snapshot device offered by Progressive. With the Progressive PAYD car insurance plan, consumers can dramatically reduce their car insurance premiums up to 50 percent if the company determines that the driver deserves a discount. After plugging the device in, the company will evaluate the data registered on the Snapshot device. The device plugs directly into the car’s diagnostic system, so Progressive will be able to monitor what time a driver drives, how fast a driver drives and the driver’s braking patterns. Clearly, the device will not help every driver on the road save money. This is particularly true for drivers who do a lot of driving and are a bit more aggressive with their braking patterns. However, the PAYD model is definitely promising for drivers who do not speed, do not drive a lot and are not considered aggressive drivers.
With the PAYD car insurance model, drivers who ordinarily pay hefty car insurance premiums each month may be able to take advantage of a hefty discount on their car insurance just by allowing their car insurance to tap into their car and monitor their driving patterns each month. What an insured can save depends on the individual driver. However, remember that PAYD isn’t a good solution for everyone, anyone who might be in a slightly less average car insurance demographic, or who could be considered high risk due to a multitude of factors might want to check in with a specialized non-standard car insurance company instead.
Although not every car insurance company is offering a pay-as-you-drive car insurance plan, more car insurance companies may begin offering pay-as-you-drive car insurance plans in the future. With so many drivers searching for ways to save money on their car insurance, the PAYD car insurance model is very promising and may very well be the next big thing on the road.