Pay-Per-Mile Auto Insurance

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Due to inflation, gasoline prices have also increased steeply. This has forced most of the people to use public transportation or to form carpool. However this approach is not able to solve the problem completely. It is because the car owners are still paying for their auto insurance coverage despite of very limited driving.

So, this problem gave birth to the idea of pay-per-mile auto insurance in which the premium amount solely depends on the number of miles you drive the car. This kind of insurance plan benefits both the driver and the insurance company equally.

The introduction of pay-per-mile auto insurance has been a great revolution in the insurance sector. It enhanced the old conventional insurance methods by linking the gasoline purchases with the insurance premium. This innovative idea of “drive less, pay less” proved to be the most economical one for most of the people.

Following is a brief description of some of the key attributes related to pay-per-mile auto insurance:

Implementation and Working of the System

There were two adopted by insurance companies to determine the mileage of the car. The first method works by installing an odometer with an embedded cell phone. This cell phone occasionally reports the mileage to your insurance company. The other technique uses a GPS device that reports our actual routes to the insurance company.

Cost

To cover the cost involved in this method, car insurance companies converts a part of your present annual rate into a per-mile fee.

Testing of the System

Following are the two pay-per-mile auto insurance programs that are on-going in United States

The OnStar Program:

OnStar, in collaboration with a national insurance company in United States is offering a mileage discount program. This offer is exclusively for those motorists only who have GM vehicles equipped with OnStar system. This method is operational only in a few states of America . The premium discount offered in this system is directly proportional to the mileage of the car.

Electronic Device Program:

In this method, an electronic device equivalent to the size of a match-box is plugged into the car's on-board diagnostics port. The sensor of the electronic device measures the exact mileage and speed of the car. The gathered information is used to calculate the discount for the customer.

Recommended Pay-Per-Mile Auto Insurance Company

Following is one of the most reputable companies operating in the United States who offers pay-per-mile auto insurance services: Prudential Financial http://www.prudential.com/

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