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Pay as You Drive Car Insurance PAYD

by Liv | Published on June 20th, 2009, 2:06 pm | Sports
pay-as-you-go-auto-insurance-ecm-module.jpg (10.96 KiB) Viewed 2146 times

I caught a blip on "Motorweek" about pay-as-you-drive car insurance from my ex-auto insurer: Progressive. It's an interesting idea. You opt in to their pay-as-you-go program and they ship you a little piggy-back computer module that plugs into your ECM port on your vehicle computer. I assume then at some point you must plug it into a computer, or it has a wifi capability built in to upload data, from everything from the speed you're driving at to what times of the day you're driving. Then you can log-on and see your usage, including how many times you broke the speed limit, etc.

It seems like a good idea right? Especially since it will encourage people not to drive, and perhaps drive safer. The idea is you're only paying for the insurance you really need, not paying to blanket insure other drivers whom are more riskier.

A recent Brooking Institution report estimates that if all motorists bought accident insurance per mile, rather than conventional, lump-sum insurance:

* Driving would decline by 8 percent nationwide, translating into a savings of about $50 billion to $60 billion a year in driving accidents and other car-related damage.
* Total U.S. carbon dioxide emissions would go down by 2 percent and oil consumption by about 4 percent, helping to stabilize our climate and reducing America's dependence on foreign oil.
* Two out of three households would pay less for auto insurance, with each of those households saving an average of $270 per car.


Apparently NC doesn't have PAYD (the acronym they're using for "pay as you drive") because of it's laws:
North Carolina, for example, requires that premium charges be stated upfront, which precludes PAYD charges since they vary according to miles driven.

It seems like a good idea to me except for one thing... it's the insurance companies that are doing it. Meaning it, while in the short-term, might save 2 out of 3 people money, clearly the long term objective is to make more money.

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