Since the COVID-19 pandemic, many people have been reexamining their lifestyle choices. People have gained a new perspective on vacations, groceries, and even car insurance. Consumers have begun to prioritize convenience over many other aspects of products and services. The effects of new market demands can be seen in nearly every market industry. Water delivery services, meal kit subscriptions, and online car selling platforms have gained unprecedented popularity in recent years.
Along with these shifts to online services comes a decreased need for a commute. Modern businesses have adapted to the remote work model that was implemented during COVID-19, often allowing employees to choose between in-office, remote work, or a hybrid of both. Suppose you have begun to utilize any of the services mentioned above in the last couple of years. In that case, you may have noticed a dramatic decline in the time you spend driving. Unfortunately, your reduced travel likely did not accompany lower car insurance rates from your insurance company. Since driving habits have changed, it could be time for your car insurance to change too.
What is pay-per-mile insurance?
Pay per mile insurance is a type of car insurance coverage that adjusts your payments depending on how many miles you drive. Traditional car insurance policies sometimes base insurance policy on driving or driving history rather than how much you drive. For people who only drive short distances or tend to utilize public transport more often, this type of car insurance model does not make sense.
Paying a standard monthly rate on your car insurance can seem like an enormous waste of resources when you have only used your car a few times that month, or not at all! This premise is the idea behind pay-per-mile car insurance. It is difficult to say precisely how much money you could save with a pay-per-mile plan because the rate varies month-to-month, entirely dependent on your usage.
How is my usage determined?
Since pay-per-mile car insurance is a usage-based method, your driving habits will need to be recorded for accuracy in monthly pricing. Usage-based insurance coverage typically operates under one of two models: pay per mile, and pay as you drive. Pay-per-mile car insurance programs use technology to track your driving behavior. This technology manifests either in the form of a mobile app, telematics program, or a device that can be plugged into your car’s diagnostic port.
This mileage tracking technology then sends the mileage information to your insurance company so they can customize your monthly car insurance rate. Pay per mile differs from pay as you drive models because it is solely based upon mileage. In contrast, pay as you go customizes your rate depending on your personal habits. If you have poor driving practices, pay as you drive insurance rates will be higher.
Who can benefit from pay-per-mile car insurance?
People who benefit from pay-per-mile car insurance include college students, remote workers, senior citizens, and people who own a second vehicle that does not garner regular usage. In other words, anyone who drives less than 8,000 miles per year can significantly benefit from this type of insurance plan. Those who live in cities with efficient public transport options may consider switching to a pay-per-mile policy.
If your lifestyle has undergone adjustments, your car insurance should too. Monthly insurance fees can be expensive. You may be wasting resources on coverage if you do not use your car regularly. If your vehicle is shared or used for vacations like road trips, a pay-per-mile plan is likely not the best option for you. However, remote workers and consumers who get most of their groceries delivered should consider making the cost-effective switch.