A new form of auto coverage, called “pay-by-the-mile” insurance has now been designed to help people to save money on their premiums and to encourage them to drive less and use public transportation more regularly.
The way that the coverage works is that drivers who put fewer miles on their vehicles will pay a lower rate for their insurance every month. It places a direct link between their vehicle’s mileage and their insurance plan.
The plan is based on an average annual driving distance of 19,000 miles. Though it does depend on the driver and exactly how much mileage they put on their vehicles, many clients with this type of coverage can see an average savings of 15 to 20 percent on the premiums they pay. Essentially, the less you drive your vehicle, the less you pay to insure it.
Many people have already started to cut back on driving due to the increasing cost of gas. Public transit and car pooling are becoming more common among people who own cars. This means that there are a growing number of people who may be driving fewer than 19,000 per year.
For those who drive more than that amount, this may not be a beneficial program, but for those who have already made changes to decrease the amount of driving that they do, this policy keeps track of their miles – either manually by the driver, or using an On Star system – and helps them to benefit from those habits through measurable saving.