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Does Usage Based Car Insurance Offer a Route to Lower Rates?

Usage-Based Car Insurance

For most American drivers, car insurance is not only legally mandated but is a real necessity. However, it’s now becoming possible to sign up for as pay-as-you-drive, or usage based car insurance. If you don’t drive very much, it can give you lower rates. However, there are certain things to know before you decide that this is the best option for you.

Wireless Transmission Devices will Monitor Car Usage

Usage Based Car InsuranceAs with traditional insurance programs, your driving habits will still play a large role in your rates. Unfortunately, if you had a habit of occasionally driving recklessly in the past, usage-based insurance programs won’t let you use the honor system to prove that you’ve changed your ways for good.

Usually, the amount of miles that you drive in a particular period is automatically calculated and transmitted to your insurance company through a device that resides in your car. However, Allstate and Progressive are just two companies that also monitor driving behavior such as the amount of times that a policyholder drives at speeds over 80 miles per hour, or the way that they use their brakes. A member of Progressive’s usage-based insurance program notes that unusual braking patterns can point the finger at aggressive drivers.

Understandably, some drivers are concerned that their privacy would be violated through these monitoring systems. Although more detailed monitoring does often result in lower rates for people who make a habit of driving safely, there are less invasive ways to get enrolled in a usage-based car insurance plan, too. Some programs only require odometer readings performed by a trained specialist, so that the company can get an accurate picture of just how much a person drives in any given month.

Usage Based Insurance Plans Reduce Environmental Impact

Data from the Environmental Defense Fund also says, “usage-based insurance plans are kinder to the environment”. They explain that if people adapt to a system that sees them paying for the exact amount that they use their vehicle, they might be more encouraged to cut down on their unnecessary trips.

Additionally, a report from Brookings Institute said that if every driver in America purchased usage based insurance per mile rather than the conventional type, there would be an overall savings of up to 60 billion each year in costs relating to accidents or other automobile damage. They also say that driving would fall by eight percent around the nation. This decrease could cut down on pollution from tailpipe emissions, too.

Why isn’t Usage-Based Car Insurance Available Everywhere?

Since Usage-Based Car Insurance, offers drivers the chance to get a lower premium, you might be curious about why it’s not yet available everywhere. In most cases, it’s because certain states have insurance requirements that don’t allow usage-based insurance.

Fortunately though, over 30 states including New Jersey, Maryland and Oregon have some form of usage-based insurance available. Others, such as California, worked with the respective insurance commissioner to get outdated regulations altered so that usage-based insurance is now available there.

If you’re hunting for ways to save on car insurance, usage-based plans may be your answer. Check today and see if it’s currently available where you live, or might be in the near future.

See Also:

Common Myths About Car Insurance

Top 10- Nicest Affordable Cars

5 Ways to Save on Car Insurance You Might Not Know About

7 Fuel Efficient Cars Under $20,000

Do You Need Separate Insurance Policies for Your Vehicles?

The Ins and Outs of Car Insurance

Do You Know That You Can Lower Your Car Insurance Costs?

Look Out Ahead: How to Avoid Common Road Hazards

From Amazon:

Usage Based Car Insurance

Insurance for Dummies


Deanna Ford writes for several insurance blogs. Find cheap Michigan Car insurance quotes and compare New Jersey auto insurance rates online.


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