Issues Surrounding Mileage Based Insurance

Posted on: 21 July 2015

Pay-as-you-drive, also known as mileage-based, insurance is one of the new ways of paying for car insurance coverage. In its simplest form, the insurance company charges you based on how much you drive – the more you drive, the more you pay. Since it's a relatively new concept, it's still fraught with misconceptions. Here are some of the things people say about mileage-based insurance, as well as explanations of whether they are true or not:

It Monitors When You Drive

This one depends on your insurance carrier; some of them are just interested in the mileage. For some insurers, it's true that mileage isn't the only thing that pay-as-you-drive monitoring covers. Depending on your insurer, other data that may be collected from your car include:

  • When you drive (special emphasis on nighttime driving)
  • How often you drive

All these are necessary in the calculation of risk – which is the whole point of the exercise in the first place. For example, hard braking is one of the most reliable indicators of a driver's probability of crashing. Those who frequently slam on their brakes are more likely to be involved in accidents than those who brake properly.

It Detects Drinking and Driving

According the Center for Disease Control and Prevention (CDC), 31% of traffic-related deaths occur due to alcohol-impaired driving. This is a significant figure, and it makes sense that motorists would be worried that insurers would want to monitor their drinking.

However, mileage-based insurance does not take into account the issue of drunk driving. There are lots of data that the insurance companies may monitor – everything from how often you drive to when you drive, but alcohol use isn't one of them. Don't get this wrong; driving while intoxicated is bad, but it isn't just part of the pay-as-you-drive form of auto insurance.

It Involves Installing a Monitoring Device

For many motorists, especially those with older models, mileage-based insurance involves installing monitoring devices. However, this is not a rule. There are newer car models already equipped with the tools to collect the necessary data.

Mileage-based insurance might not be right for you if you are a risky driver; to a degree, this is also true of other forms of auto insurance. However, if you are a good driver, then you can adopt this the next time you are renewing your coverage and enjoy the associated discounts. Talk to your insurer or agent, like Thomas A. Nolfi Inc., about the specific discounts available. 

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