Pay as you drive strategy means lower auto insurance

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27Usage based insurance or UBI is fast becoming quite popular in the country. This is because, customers, don’t need to pay high auto insurance premium anymore based on the estimated annual mileage for their vehicles. Rather their auto insurance premium will depend on the actual number of miles they have driven their cars for as shown by the odometers.

MileMeter which is an auto insurer based in Texas, has pioneered the PAYD model. PAYD stands for pay as your drive and this model of auto insurance coverage in the US is actually being taken up by many drivers. As per the MileMeter auto insurance plan, drivers of vehicles will be paying premiums based on the actual miles they drive, instead of the standard practice of using the yearly estimated mileage. Uote a few California auto insurers too have been given approval by the insurance commissioner of the state to offer this pay as your drive policy to vehicle owners.

Travelers Insurance in Connecticut, recently has added a new step to this interesting concept. They have used a new technology called telemetrics, which would be installed in the vehicles. The GPS like device in the vehicle would monitor the distance traveled and record the actual mileage of the vehicles. Interestingly the device would also record such data as speed, braking habits of the drivers, vehicle conditions, weather conditions in which the vehicle was driven etc. Although some customers seem to have been surprised by this offer, it is not really mandatory. However, big companies with huge fleets like UPS are taking it up. UPS has installed the technology in its deliver vans.

The sole problem with bringing this technology to the mainstream is the high cost of the device involved which is around 2500 dollars. Aviva, the Canadian car insurance company and a few other auto insurance companies from US are trying to popularize the technology. But there is resistance from drivers against this technology.

Some of the resistance is because of the invasion of privacy due to this technology. However, some customers are welcoming UBI purely because it offers an extra discount similar to what vehicle owners get for not violating traffic rules over a period of time or not making any claims. Although the UBI technology is becoming less expensive, installation could be a complicated and expensive process. Currently every insurance company will have to come up with its own version, which will make the process more difficult.