Car insurance companies across the United States have begun testing a new type of insurance policy that only charges customers for the actual number of miles they drive during a certain period of time. All the driver has to do is install a small tracking device under the steering wheel so that the insurance company can monitor the mileage. Once the policy is in place, the insurance company only bills the customer for the miles that are reported through the tracking device. Customers who use this system have an unprecedented amount of control over their insurance costs. If they want to pay less, they simply drive fewer miles.
Driving Less Reduces Accident Risk
Recent research conducted by the Massachusetts Institute of Technology shows that driving fewer miles reduces the risk of being involved in a car accident. If Pay as you Drive customers make an effort to reduce their mileage, they will also be reducing their accident potential. The result could be good for the insurance company because there will be fewer claims, while it would also benefit the customer through lower insurance premiums.
Good for the Environment and the Pocketbook
Researchers believe that Pay as you Drive customers will monitor their driving more carefully so that they can pay as little as possible for car insurance. People might begin to consolidate trips and find alternative transportation so that they are in their cars less often. If a large group of drivers cut back on their mileage by a substantial amount it could have a direct impact on emissions levels. More efficient driving habits can also save gasoline, which would help conserve fossil fuels. Drivers will save money on their fuel budget while they are already saving money on their car insurance.
Device Tracks More than Mileage
Some consumer advocate groups worry that the devices are too invasive. The steering wheel tracking device is meant to log mileage, but it also tracks the way the car is driven. The insurance company can monitor your speed, how quickly you brake, and how quickly you accelerate. While parents might find this a useful way to make sure their teenagers are driving safely, they might not like the fact that the insurance company is keeping tabs on how safely the car is driven at all times. It is possible to see car insurance premiums actually increase instead of decrease if the car is regularly driven in a risky manner.