As job growth stalls and household budgets shrink, more drivers are warming up to cost-cutting pay-as-you-go car insurance programs.
Pay-as-you-go plans peg your insurance premiums to the number of miles you drive. Drivers also receive discounts for avoiding violations and accidents, and for limiting time on the road during peak-traffic hours and late at night.
If you meet all pay-as-you-go requirements, it's possible to save up to 30% on car insurance premiums.
A majority of drivers who took an MSN Money-Insurance.com online poll said they would at least consider driving less if it meant they could save money on car insurance. The poll results were as follows:
Would you be willing to drive less to cut your insurance rate?
- Yes, 24%.
- It depends on how much money I could save, 35%.
- No, 21%.
- I can't drive less than I already do, 20%.
The unscientific poll appeared on MSN Money's homepage Sept. 1-6 and drew 8,702 responses.
Insurers respond to demand
Two of the nation's biggest insurers are now responding to this growing demand for pay-as-you-go coverage.
State Farm, the country's largest insurer, plans to introduce a telematics-based effort dubbed In-Drive to drivers in Illinois this month. Additional states are slated to receive In-Drive in 2012.
Allstate, the nation's third-largest insurer, recently expanded its Drive Wise pay-as-you-go program to Ohio and Arizona after an earlier rollout in Illinois.
It's no coincidence that pay-as-you-go insurance is on the upswing at a time when the economy is in a downward spiral, said Robert Passmore, a spokesman for the Property Casualty Insurers Association of America.
"A lot of companies are offering it, and a lot of people are driving less and looking for ways to save money," he says.
More control, lower premiums
If you join a telematics-based program, you'll typically be asked to install a device in your car's diagnostic port (located below the steering column) that records information such as:
- How many miles you drive.
- How often you brake hard.
- How smoothly you navigate turns.
Initially, privacy advocates raised concerns about these devices and their ability to snoop on drivers. But the success of programs such as Progressive's Snapshot and a GMAC Insurance program based on OnStar technology apparently has convinced more insurers that pay-as-you-go insurance is the wave of the future.
