Pay-as-you-go plans are not a new concept. They’ve been around for years for cell phones and even for cable or satellite television. In 1988, the state of California approved Prop 103, which would allow consumers to opt into a pay-as-you-go car insurance plan, though it has taken until 2010 for the state and insurance companies to catch up to this concept. Of course, pay-as-you-go vehicle insurance plans are not quite the same as prepaid cell phones or even pay-as-you-go cable or satellite TV.
How Does California’s Pay As You Go Car Insurance Plan Work?
Traditional car insurance plans work by tracking a person’s driving history, as well as taking into account their current vehicle, milage per year and various other factors. A younger driver, even with no accidents, can expect to pay more than an older driver simply because the younger driver has less driving history. Furthermore, the more accidents, tickets and other violations a person has over the years, the more their insurance will cost.
With California’s pay-as-you-go auto insurance plans, drivers can receive a discount for driving fewer miles starting in February of 2011. This alone can be a huge benefit to many people in different circumstances and will be most beneficial to people who drive less than 19,000 miles per year. However, it is important to note that these plans still take into account a person’s driving history and other factors.
Benefits of California’s Pay-as-you-go Auto Insurance Plans
Clearly one of the biggest benefits of these plans will be monetary savings. People who are looking to cut costs in their lives may find that even pinching a few pennies through a pay-as-you-go insurance plan can help make a difference in their finances. Not only does it save money on the cost of insurance, but cutting back on driving specifically to save money on the insurance will also lead to reduced costs elsewhere. This includes spending less on gas, vehicle maintenance and so forth.
Those who are truly feeling the pinch of today’s economy will find that the pay-as-you-go insurance plans can help them save significant amounts of money. This is especially true of those who are currently unemployed, those who work from home or retirees.
Furthermore, the state hopes that pay-as-you-go plans will encourage more carpooling. Carpooling helps cut down on the same costs as mentioned above, but it is also better for the environment.
Though the pay-as-you-go moniker may be misleading since it still takes into account a person’s driving history, it can help many families save money throughout the year. It is a great way not only to save money, but also to encourage carpooling. The California pay-as-you-go auto insurance plans are not for everyone, but they can be beneficial for many.
About the Author: Kit Drobot lives in California and knows how tough it can be to find vehicle insurance at a reasonable price. He works from home and doesn’t travel frequently, so he really enjoys this newer option!