General Information On Pay-As-You-Drive Ins Program

Usually, as the market evolves, other more and better innovations and methodologies are introduced. The products get modified and are improved so as to meet the needs of more people in the wide growing market. A good example of such a scenario is the introduction of the pay-as-you-drive ins program.

This insurance program is still new to the market. It is also known as PAYD. It takes into consideration the amount of mileage a vehicle has attained while under coverage of its insurance policy. Currently it can is only found in some states, since it has to go through several legalities before being accepted in each and every state.

It was first introduced in 2004 and was not consistent then. It used to be on and off every now and then depending on the consumer demand. However, today, it is available in more than 30 states and is also being introduced in other countries.

In this policy, discounts are usually offered by insurance companies so as to persuade clients to limit the mileage. The mileage is measured by different methods. It can be obtained from the odometer reading given by the owner. This method is not very effective since some of the clients commit fraud.

There is a more sophisticated method that uses devices that track the vehicle. These devices are strategically placed, so as to prevent people from accessing and tampering with them. This method is preferable because it gives more consistent tracking information and is not easily tampered with.

The pay-as-you-drive ins program works on a simple principle. When less time is spent behind the wheel, there is a lesser possibility of accidents occurring. So, a certain formula is used to calculate discounts depending on the mileage. Drivers who spend less time driving get the largest discounts while those who use their vehicles frequently get the least discounts.