Saturday, January 19, 2013

Pay As You Go Insurance: What It Is and Why It's Growing in Popularity

The high cost of insuring a vehicle continues to take a huge toll on the financial resources of many consumers. An increasing number of people have been driven to seek out and utilize innovative measures that will help them save on car insurance. The "Pay As You Go Insurance" plan is one of these options that is fast gaining popularity among vehicle owners. 

Pay As You Go Insurance 

Pay as you go insurance is a revolutionary payment system that some insurers have put in place to help their customers pay the insurance on their vehicles. It is a mileage discount program that calculates the auto insurance premiums using the number of miles you drove. More mileage results in higher payment so the less you drive the less you pay. This plan works well for drivers who do not use their cars all the time. Instead of paying a flat fee for a set period of time then have the car sitting there unused for a significant portion of that period, they only pay for the time the car was actually used. Other drivers who use their car more frequently can save more by driving less. The first telematics technology-driven Pay As You Go insurance discount program in the United States of America was implemented by GMAC Insurance and Onstar. 

Pay As You Go is the ideal insurance solution for those who would prefer to not commit themselves to a demanding insurance contract or having to pay high monthly fees. This payment method was popularly used to finance mobile phones and is now proving as an effective method to pay and save on car insurance. 

The Reason Pay As You Go Insurance has Gained Popularity 

Vehicle owners, depending on the state they live, have to pay as much as $600, $1000 and even $2500 for their insurance premium per annum. Those who will not be using their car for much of that year stand to lose money when they pay the full sum of the premium. Having the option of simply paying for the time you drive your vehicle is by far a more convenient and financially friendly solution. 

Drivers can also control the cost of their premium by paying attention to their driving details. For those who are on the plan, a small monitoring device is installed onto the vehicle to collect certain information. The device will record information such as when you drive, the distance you traveled, and the frequency or force with which you brake. This means that a driver's style of driving will ultimately determine the cost of his premium. Those who want to save on their insurance can tailor their driving habits to lessen their premium. 

Car insurance is a major expense for vehicle owners. Pay As You Go Insurance offers some relief to many people who find it difficult to meet the annual payments. The coverage is now offered by eight of the ten top insurers in the U.S.A. Both insurers and customers have realized the savings they enjoy when they pay their insurance as they go.
Andrew Macneil has a background in the auto insurance industry and enjoys writing on the subject. His articles appear on a number of personal finance and insurance blogs. Visit Cheap Insurance for more details.

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