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Pay As You Go Car Insurance
Pay as you go car insurance is a relatively recent option that has increased the choices available to drivers. For people in certain situations it is a way of saving a lot of money on insurance, but it is not right for everyone. It is definitely not for people who have a high annual mileage and who travel every day. It is designed more for occasional or irregular drivers whose mileage can change depending on the time of year, etc.
This type of pay as you go insurance cover depends on some clever technology in order to work. What happens is that a tracking device is fitted to your vehicle, so that the insurer knows how much mileage you do each day and at what time. The cost of your insurance is worked out from that. When you set up a normal annual driving policy, the insurer will be considering a number of factors when working out how much to charge you. These include obvious things such as the car you are driving, your age and where you live, but they also include the mileage you do and what you are using the car for. All of these things affect the likely risk of a claim, and therefore the cost the insurer has to charge you.
How much you drive and what time you drive are important factors in assessing the risk, so if you can reduce or control these, then you should pay less in premiums. What the tracking device does is allow the insurer to know not only exactly how much mileage you do, but importantly, what times of day you are doing it. The more time you spend on the road, the greater the chances of an accident, but the risk is also much higher at certain times of day compared to others. So these things do matter and have a direct affect on what you should pay.
How Much Will Pay As You Go Car Insurance Cost?
When you apply for a quote for pay as you go car insurance you will be asked questions about your expected mileage. This might include facts like whether you do a lot in some months and not much in other months. Using the information you provide, they will then be able to work out an individual premium that is unique to your actual driving requirements. This will be reflected in what you are charged each month, so if you do very little driving your costs will be lower and if you are off touring the country for a week your costs will go up. This is a very cost effective option for people with irregular driving patterns and is particularly popular with young people, because the cost of annual young drivers insurance can be very prohibitive.
Not all insurers offer the pay as you drive option, but a lot of companies now do. What happens when you go for this type of policy is that you will need to arrange a date for someone to come and fit a small device into your car, which is basically a satellite tracking system. This clever gadget then allows the insurer to know all the details about your driving, including the times you are driving, the types of roads you are driving on and your mileage on each day.
All of these facts have a direct correlation in terms of risk and therefore cost, so this information is then used to calculate your premium each month. Depending on who you are insuring with, the way these costs are passed on can vary. You may either get a bill for each month based on your actual driving, which is really the point of pay as you go car insurance, or it may be averaged out over the year and you pay a set monthly amount based on your expected pattern across the whole year.
The latter option is more like the way many of us pay our electricity or gas bills, where the total amount is estimated then averaged into a monthly payment. If the amount you have paid is over or under at the end of the twelve month period, it can be sorted out at that point. This can mean either issuing a refund, having to pay extra, or just amending your monthly payment.
Who Is Pay As You Go Car Insurance Best For?
Other more usual factors will still affect your premiums as with any other policy, but by using this sort of pay as you go car insurance policy you can have more control over what you pay and make sure you are not paying over the odds for times when you are not driving at all or not driving as much as you do at other times. You are most likely to benefit if your annual mileage is relatively low compared to average. If you only do five or six thousand miles or so, you may well make substantial savings compared to a standard annual policy.
Many people under the age of twenty five and living with their parents find this to be a particularly useful way to get on the road. Just finding any affordable insurance for young drivers can be quite a challenge in itself, so this type of option is very welcome.
