Every heard of pay-as-you-go car insurance? If not, don\’t feel bad because some states just started experimenting with this new, different and cheaper alternative to conventional auto insurance. We all know the traditional auto insurance model, which involves prepayment of insurance premiums for a specified amount of time.
California legislature has approved a new pay-as-you-go car insurance plan that\’s partly based on how many miles drivers tell their insurance company they anticipate driving each year. The program is not the first in the country, but is the first time the entire state gets a green light to proceed. However, the catch is that drivers have the burden of proving the estimated miles driven in order to get a discount.
This will allow insurance companies to concentrate more on providing coverage for actual vehicle use rather than just owning one. This will become a much cheaper alternative for drivers who tend to stay more local than long distance. This plan will be called the \”Verified Miles Plan\” and the actual mileage will need to be monitored in some way.
This type of insurance will be available for purchase in blocks of mileage rather than a flat monthly rate for a specific time frame. If short, local trips are all that are made, a block of 20,000 miles may last the average person up to two years in some cases. Think of this like pre paid cell phone minutes for your car.
The Environment Defense Fund (EDF), which tackles the most serious environmental problems, predicts if one third of Californians participate in the pay-as-you-go-plan, over 50 million tons of greenhouse gas emissions can be avoided through 2020. This plan is optional and other more traditional car insurance options will still remain available. However, there are some controversies that come along with the new plan.
By using a GPS unit mounted in the vehicle to track the mileage, this will also let the insurance company know your every move. This can be taken as an invasion of privacy should this information be used against you at a later date. Data that can be monitored by the GPS trackers are such things as location and speeds on the road.
Do you really want your insurance company or agent knowing your every move? The insurance companies have to submit all the policy details to the state for the final approval and this type of policy may be offered as soon as January 2009. The program has been available in other states since the beginning of 2009. Prior to the California, the plan took shape in Cleveland, OH and Winston Salem, NC.
Other than the possibility of privacy invasion due to the information gathered from the GPS unit, many drivers will find this to be a great alternative to the higher cost of standard car insurance. If the vehicle use can be kept to under the policy restrictions, then the drivers will save much more than just money. This allows them to assist with keeping the environment healthy as well.
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