Are you the type of driver that doesn’t use your car often? If so, there may be no need to pay higher premiums for low usage. That is where the concept of what is pay as you drive insurance comes in.
This is a type of insurance policy exclusive to drivers who travel for fewer kilometers. In this article, you are going to discover what the policy covers and why you should get it.
Pay as You Drive Insurance Review: What Does It Mean?
Pay as you drive insurance is an insurance policy that calculates vehicle insurance costs based on distance traveled. It is also known by many other names, such as:
- Usage-Based Insurance
- Mile-Based Auto Insurance
- Distance-Based Insurance
- Pay How You Drive Insurance
The policy specifies that the premiums paid to vary by the driver’s driving pattern and the miles covered. You can expect to pay lower premiums only if you traveled a few distances. As your mileage increases, so does your premium.
One unique thing about the pay as you drive car insurance is that it rewards drivers who stick to the terms of the policy. By covering a few miles, you tend to pay lower premiums than another driver that covers more.
How Does Pay as You Drive Insurance Work?
This insurance policy works by using a telematics device to calculate the miles covered. Some auto insurance companies may also rely on the car’s odometer reading for the calculation.
What You Should Know About Pay as You Drive Motor Insurance
Here are some of the important facts you need to know about pay as you drive insurance meaning:
1. Length of the Policy
The length of pay as you drive insurance is a year. Policyholders can renew the insurance after that.
2. Driver’s Style
The style of driving the vehicle can also impact the premium paid for the coverage. A driver who has been found guilty of dangerous driving may pay higher than another that drives carefully.
3. Over-Speeding and Pay as You Drive Insurance
Over-speeding can also impact how much you pay on a pay as you drive insurance. For example, if you speed while it is raining or snowing, you may just be attracting a higher premium.
4. The Coverage is in the Milage
The amount of money paid to keep the policy active is determined by the milage. Since this is mileage-based insurance, the distance covered is what matters.
5. Cost of Purchasing Pay as You Drive Insurance
How much will you pay to purchase the pay as you drive insurance from your auto insurance provider?
It may vary by company, but the cost is usually lower than a traditional car insurance policy. The lower premium is because of the calculation by miles and not by overall usage.
What Types of Drivers Generally Pay More?
The drivers that pay more with the pay as you drive insurance are those who are:
- Using the vehicle beyond the recommended mileage
What Type of Pay as You Drive Insurance Should I Get?
Wondering about the type of pay as you drive insurance policy to purchase? Here are a couple of ideas to inspire you:
1. Odometer Pay as You Drive Insurance
This type of usage-based insurance uses the odometer in your vehicle. The auto insurance company only needs to check the miles covered to determine the premiums payable.
2. Telematic PAYD
This type of pay as you drive insurance involves using a telematic device to check the mileage covered by your vehicle. The insurance company typically installs this in your vehicle. The benefits of using the telematics device include:
- Monitoring the driver’s habits.
- Checking the number of miles covered with the vehicle.
- Monitoring the overall condition of the car.
Why Pay as You Drive Insurance is Best for You
Certain car owners will find it ideal to use what is pay as you drive insurance to protect their vehicle. Here are some of the potential benefits of the coverage:
1. Get Free Telematic Device Installation
Most auto insurance companies do not charge for installing a telematics device in your car. With the device, the mileage covered by the vehicle and the overall condition of the car is recorded.
2. Pay as You Drive Insurance Cuts Down on Your Premiums
Car insurance companies can offer up to a 50% discount on the cost of getting the pay as you drive insurance. When compared to the traditional auto insurance policy, you will see how much you’ve saved.
3. Pay for What You Used
Indeed, the concept of pay as you drive insurance is to allow you to pay for the mileage covered. So, you can be confident in paying for only what you used the vehicle for.
4. All-Year Third-Party Coverage
Damages to your vehicle can be because of an accident or ramming into a hard surface. In most cases, there is a third party, who is usually the driver of the other accidented vehicle.
By default, your car insurance policy doesn’t cover third-party claims if the claims are made after their expiry.
The reverse is the case with the pay as you drive insurance. Policyholders can continue to enjoy a year’s third-party car insurance coverage.
5. Incentivization for “Good Driving Habits”
Do you drive so fast? It may be time you cut down on it because pay as you drive insurance incentives for drivers who drive “safely.”
The definition of safe driving ranges between covering a few miles and avoiding getting into a collision.
6. Customize Your Options
You can also leverage what is pay as you drive car insurance to customize your driving options. Slabs can be increased if you intend on covering more miles. You can also convert from usage-based car insurance to traditional auto insurance when the former policy is exhausted.
Pay as you drive insurance or PAYD is a great way to pay lower premiums on your car. Try to keep within the recommended mileage. But if you want to go overboard, consider converting your vehicle to regular auto damage. Just make sure you pay the required premiums and on time too!