Right at the time when consumers are looking for ways in which they can get better auto insurance coverage at reduced costs, an increasing number of auto insurance companies are offering the “pay-as-you-go” policy. As the name says, consumers need to pay only for the insurance coverage used.
For a number of years, financial experts and customers have been lobbying for this type of auto insurance coverage. However, it is only now that the providers are taking an interest in their demands and trying to meet them. Progressive Insurance was the first provider to introduce this type of coverage in 32 states around the country. The other providers who have rolled out this policy in a few states are Allstate and State Farm. This type of coverage was first rolled out in the state of Texas and the most recent state to join the bandwagon is California.
Industry experts stand by the fact that the pay-as-you-go policy helps customers save a significant amount of money. Chris Kissell, an industry expert, says that this is the best type of policy for people who drive very few miles each week. Progressive, the leading auto insurance provider in the country estimates the savings to be in the range of $150 annually.
Though this coverage seems to be pretty attractive, industry experts are quick to warn that this is not the right choice for all types of people. Before issuing this type of policy, providers install a tracking device in the customer’s car for certain period of time to determine their driving habits. Kissell says that a lot of drivers consider this to be an invasion of their privacy and hence, hesitate opting for this coverage.
The rules and regulations of the “pay-as-you-go” program vary from one provider to the other. Providers generally think twice about offering this coverage or discounts to drivers who tend to drive late nights.
Though Progressive offers this type of coverage, not all consumers are happy with the tracking device they use to test the driving habits. Customers applying for this policy will have to get a “snapshot” device installed in their car for a period of 30 days while the company decides their eligibility. Consumer Watchdog representative, Carmen Balber, says that it is not worth asking the consumer to give up their right to privacy just to get good insurance rates. In addition to this, Carmen also says that this program also unfairly penalizes drivers who work late and denies them coverage at times.
