Are you ready for pay as you go car insurance?

peel out carPay as you go isn't just for cell phones anymore, it turns out some auto insurance companies are switching to pay as you go plans in order to offer better rates to customers. Traditionally insurance rates are based on, among many things, the estimated miles that each driver will travel during a year. Many people argue that these estimates are inaccurate and that a pay as you go plan would provide consumers with an incentive to drive less. Legislation is currently underway in California to let insurance companies base rates on actual miles traveled it is estimated that it would be the equivalent of removing 10 million cars from the road!

While California is only on the cusp of letting insurance providers make use of this information to determine what your premium will be at least one other company is already offering pay as you go insurance rates in several states. Progressive offers a My Rate program in four states and requires that users hook up a device to their car which tracks the miles traveled as well as how you drive to recalculate your rate every 6 months.

Both of these plans have some similarities, neither will track where you go with GPS and both of them are under fire by privacy groups. The programs differ in that the My Rate plan from Progressive tracks WHEN and HOW you drive in order to determine your insurance rate. In California, much to the chagrin of insurers, neither of these pieces of information can be tracked.

Personally I would much rather have a pay as you go plan set up like the California legislation since there are times that I drive like an extra in the latest Fast and Furious movie. Even though the Progressive plan gathers a little more data and would likely cost me more, I think overall most people will like it for one reason. By bringing in driving habits including style, time and distance, Progressive should theoretically be able to provide those of you who drive like your car is a bubble with a better price. Under this plan you won't be paying for those of us who drive more aggressively. If you aren't up for letting your insurance company have access to your driving information, all is well since the programs are voluntary. . . for now.

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