In recent years car insurance companies have realized that “one size fits all” really doesn’t apply to car insurance plans. The New York Post article “Pay-as-you-drive insurance revs up” by Jeremy Olshan describes a new way to get some traffic off the clogged New York streets. We recently wrote about insurance companies trying out the pay-as-you-drive system while some places in the country have been using this system for years. The Bloomberg administration in New York is hoping that a system like this where you save money the less you drive will help keep some drivers off the road and unclog the streets.
While insurance companies traditionally made up for the more frequent accidents by high mileage drivers with premiums from low mileage drivers, this new way of charging customers would change all that. Driving could be reduced by as much as 8%, emissions by as much as 2%, and oil consumption could go down as much as 4% with these incentives. A State Farm insurance quote could lower drivers’ rates by up to $270 per car just by installing a device in your car that monitors the number of miles you drive and other driving habits.
Progressive’s Snapshot plan was approved in New York just recently. In other states, drivers have saved as much as 30% off of their premiums by having their mileage and driving time monitored for six months. Progressive also looks at acceleration and hard braking and takes those factors into account. GMAC offers insurance plans using monitoring from their OnStar systems. The pay-as-you-go plans are not yet available in New York, but have been successful around the country. Drivers must drive less than 15,000 miles a year to qualify. Those driving fewer than 5,000 miles a year have received over half off their premiums. While some are concerned about privacy related to tracking drivers, the ability to save money and cut down on traffic seems to override that.
