Should You Consider Pay As You Drive?

The Brookings Institution reports studies finding that 2 out of every 3 American households would save money if they switched to Pay As You Drive auto coverage, with an average savings of $270 per year. Pay As You Drive insurance, as its name suggests, is priced on the basis of the number of miles you drive. These plans give you a real reason to drive less and save more.

Who should look closely at Pay As You Drive? Anyone could consider a Pay As You Drive plan, but the real winners are low-income and low-mileage drivers. Low-income drivers also tend to below-mileage drivers due to the high cost of operating their cars. While frugal usage of your car does not save you money on traditional car insurance, it is actually rewarded with Pay As You Drive. And as you save money on your car insurance, you also save money on gas, maintenance, wear and tear, and the cost of replacing your vehicle.

In addition, low mileage drivers tend to subsidize high mileage drivers under a traditional insurance program, in which drivers pay the same amount of money for insurance premiums whether they drive a few hundred miles or a few thousand miles. This subsidy is removed under a Pay As You Drive insurance program. Higher mileage drivers would pay more for their insurance under a Pay As You Drive insurance system, which makes this system a more fair and equitable way to charge for insurance premiums.

It's true, of course, that not all low-mileage drivers and low-income drivers. People who live in very large cities often don't drive cars, and many keep their cars in the garage for the simple reason that they care about the earth. Either way, the fewer miles people drive, the less they contribute to pollution and greenhouse gases. Any driver who feels he or she deserves some monetary recognition for being a friend of the earth should look into Pay As You Drive.

Who else benefits from Pay As You Drive? Auto owners looking to save money in a tight economic environment should also consider these plants. Since premiums are computed on the basis of distance driven, there's a real reason to drive less?because the savings aren't limited just to gas costs. And don't forget, the fewer miles you drive each year, the more years you can drive your vehicle. Cars last longer when they are driven less.

Almost any driver can benefit from Pay As You Drive. If you are interested in learning more about how these plans can save you money, help save the environment, and save your having to buy a new car, see a qualified insurance broker. Your insurance agent can answer your questions and create just the right plan to help you maintain the coverage you need and save hundreds of dollars each year.

Tom Martens is the content syndication coordinator for Carinsurancesa.co.za. South Arica?s leading car insurance portal.