Pay As You Drive Auto Insurance: Will It Help?
It could. The major auto insurance companies are starting to offer the "pay as you drive" option in auto insurance that would allow the company to observe your driving habits. Usually, the monitor is plugged into your cars diagnostic port, usually used to diagnose problems. This is how Progressive's Snapshot works. While connected, it records your habits, speed, braking and after a period of time, it will tell you whether you get a discount and how much.
According to State Farm, most drivers will get 10% discount, even though companies often cite up to 50% discounts. That is only the case if you drive less than 500 miles a year! The pay as you drive option is only good for certain drivers because the key is how often is the car driven. If you drive less than 10,000 a year, stay under 75 mph, drive a 1996 or newer car, then, sharing your data with the company could save you 10%. So, if you pay $200 every six months, you pay only $180. Not much, in my eyes. If you drive more than 15,000 miles, drive an car older than 1996, you will not get a benefit. If you are a young driver, forget it.
Since it is based on how much you drive, you could get a more expensive bill if you drive a lot, so it is really not for a commuter. It is also not for those who claim they drive less than 10,000 miles when they sign up and in reality, they drive 20,000 miles a year. But, if you do fall into the category, it might be worth trying and see how it works. The only data being transferred are your driving habits within a specific time frame.
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