If you do not put a lot of miles on your vehicle each month, you may want to consider switching to usage-based car insurance. This is insurance designed for individuals who don't do a lot of driving throughout the year.
Thing #1: Two Different Types of Usage-Based Insurance
There are two different types of usage-based insurance. First, there is pay-per-mile, where you literally pay based on how many miles you drive each month or over each year. The other type is pay-as-you-drive or pay-as-you-go, where your insurance company creates a rate for you based on the driving style that you are charged.
Thing #2: Great for Low Driving Individuals
Usage-based car insurance is great for individuals that don't drive that much or for vehicles that don't get driven that much. For example, if you work from home, you probably don't put nearly as many miles on your vehicle as someone who commutes daily. Or if you are in college and you leave your vehicle at home, you are most likely not putting that many miles on it. Or if you tend to use mass transit and keep a vehicle for backup. Or if you have a second vehicle that you rarely drive.
These situations are perfect situations under which one should check and see if usage-based insurance is for them.
Thing #3: Pay-Per-Mile Requires Documentation
With pay per mile, you are paying a base rate for your insurance that stays consistent, regardless of how much you drive. Then, you have a per-mile rate, which you are charged based on the number of miles you drive throughout the month. Often, there is a cap for how many miles you can drive each day. Some companies will require you to install a device that tracks your mileage, and others will allow you to take a picture of your odometer and use that as evidence of your mileage.
Thing #4: Pay-As-You-Drive
Pay-as-you-drive is a different type of usage-based insurance. With pay as you drive, your insurance rate is based on how you drive. This is determined by installing a device that tracks your driving habits for a set amount of time on your vehicle.
This device will track how you accelerate and speed, how hard you brake, the time of day you drive, how often you drive, what type of cell phone usage you engage in while driving, and how many miles you drive. You may have to install a device or use an app to track your driving habits for a few weeks or a few months. This information will be used to determine your insurance rates.
To learn more information about car insurance, reach out to an insurance service near you.
After we purchased our first home, we realized that it might be a good idea to evaluate our insurance coverage. Although we had purchased homeowners insurance before, we had never owned a policy as large as the one we would need for our new place. Also, our new home had a trampoline and a swimming pool, which made us worried about liability. To iron out the details, I decided to meet with our insurance agent. We talked about things like monthly premiums, coverage limits, and deductibles, and it was incredible to learn more about the terminology. This blog is designed to help you with the same types of questions.