Owning a car can be pretty useful, even if you only use it for occasional outings or to drive to work. It also takes away the need to get a rental car, take public transport, or walk.
As wonderful as it feels to be a car owner, it can be quite a hassle to deal with the unforeseen costs associated with it, such as fuel, depreciation, and maintenance. Furthermore, if you drive your car only rarely, paying for car insurance is just another substantial additional cost.
Fortunately, new insurance options have been explicitly introduced for drivers like yourself. These allow you to pay only for the miles you drive instead of the miles the insurance company assumes you will.
What Is Pay As You Go Insurance?
Pay-as-you-go insurance is a relatively new policy in which premiums are calculated by seeing the frequency you drive and how far you go. The insurance company, thus, does not charge you based on their predictions but rather on how much you drive your car.
Essentially, infrequent drivers get cheaper premiums than those who spend much time on the road. That makes it an excellent option for people who may not drive around much, but still want to be protected.
The insurance company you opt for will then write your policy based on your usage. Traditionally, they would use stats to calculate the probability of risk. For this policy, they will consider your driving behavior.1
Who Can Benefit from It?
The car owners who can benefit from this usage-based policy are:
- Those who live in urban localities and only use their car for occasional road or shopping trips;
- Retired or senior persons who do not use their car that much;
- A family who has several cars, and;
- Those working from home or taking public transit to get to work.2
Best Insurance Companies That Offer Pay As You Go Insurance
If you fall under any of these categories and want pay-as-you-go car insurance, then these are some of the best companies to turn to.
Allstate has a Milewise option that allows customers to pay per mile if they drive, on average, between 1,000 and 10,000 miles in a year. The average person in the U.S. drives approximately 13,400 miles per year, meaning you need to go a lot less than that.3
The main eligibility criteria is to own a modern car to handle a telematics device, an instrument used by car insurance companies to analyze your driving behavior. This typically means cars made in 1996 or after.4
Progressive offers usage-based auto insurance by the name of the Snapshot Program. Through this program, Progressive adjusts the rate you pay purely based on your driving behaviors. Namely, how often you drive, how you drive, and when you drive.5
Just by signing up, you receive an automatic discount, which on average is $47. On top of that, their clients, on average, save $146 a year through the Snapshot Program.
All clients have to do is download the Snapshot Program app or opt for the plug-in device that allows Progressive to determine your driving habits. There is also a 30-day trial during, so you can decide if this program is right for you or not.6
State Farm’s Drive Safe & Save pay-as-you-go program allows you to save up to 30 percent on premiums if you prove your driving habits are safe.
All you have to do is download their app to keep track of your driving habits, such as quick accelerations, hard braking, and speeding, as well as the distances you drive. Then, you have to sync it to the Bluetooth Beacon they provide and keep that in your car as you go. This gives State Farm the data they need to assess your case and renew your insurance contract.
Even better, you can enroll every eligible vehicle you have in the household to save more money.7
Safeco has a pay-as-you-go program known as RightTrack. This program can help existing customers save up to $513 annually if they drive safely.
When purchasing an auto insurance policy from Safeco, clients who signed up for the program will then download the Safeco RightTrack app. This will help measure driving behaviors based on total miles driven, night-time driving, braking, and acceleration.
Once clients have used the app for 90 days, Safeco will calculate the savings and apply it to their premium.8
Available for anybody to download, DriveSense is an app made by Esurance that logs users’ driving habits. Although anybody can use the app, DriveSense offers exclusive discounts for Esurance customers. All you need to do is request a quote online or through the app, and Esurance will apply a discount.
Once enrolled, you will need to log at minimum 50 trips per term. After that minimum is logged, Esurance will look over your habits and customize your discount accordingly.9