How Exactly Does Pay As You Drive Auto Insurance Work?
Post date: December 18th, 2011 |
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There’s a rather cool product in the car insurance market these days. The brand new participant is the pay as you drive car insurance. It began with one organization, Hollard and today additional insurance providers are starting to develop similar packages. Here is how the Hollard pay as drive car insurance policy works.
The concept is pretty simple. Whenever you take out a Hollard pay as drive car insurance policy you are likely to end up paying monthly premiums which are worked out according to the amount that you drive every month. The more you drive the more you pay. The concept is pretty simple however the implementation takes a bit of work.
The first thing that the Hollard pay as drive car insurance plan needed to overcome was how to track the kilometres that were driven by a single vehicle in a thirty day period. This was made by adding a monitoring device in the car. You’ve got two options for this tracking gadget with Hollard. The main one is actually supported by an external company and gives you all the benefits of a policy with them. You get the vehicle monitoring and also the recovery service and all the remainder. The other, less expensive option is to set up a Hollard supported monitoring device which just records kilometres driven. You don’t need to be worried about an invasion of personal privacy as the insurance company is able to only get the info on the kilometres you’ve driven.
When you initially sign up for the Hollard pay as drive car insurance plan you have to estimate the amount of kilometres that you drive every month. This will tell you exactly what level of insurance policy you need to sign up for. It is okay should you underestimate as hollard has made provision for this. Your own plan will go through a probationary period where the real number of kilometres driven will be evaluated. If you have underestimated the additional kilometres are deducted from a safety net of kilometres that is allotted to you when you start the policy. This saves you having to pay at the after plan price for each kilometre for the first couple of months.
Once the correct bracket has been decided you are allocated a certain quantity of kilometres each month. if you do not use all of them then they go into a piggy bank of sorts to ensure that if you surpass those kilometres you can use some of your saved kilometres instead of paying the out of cover price. If you do not have sufficient spare kilometres then you are going to have to pay for each km exceeded at a much higher price compared to your own plan rate.
The concept would be to reward individuals for driving less through lowering their car insurance rates. It appears to work pretty well, especially since any extra kms are saved for a rainy day if you need to drive a lot more than you normally would and this extra driving would cause you to exceed your own monthly allocation of kilometres. So if you drive very little, this might be the insurance plan for you.