As gas prices rise and the economy slumps, many Americans are frantically seeking a way to reduce expenses. The most common fuel reduction options seem to be public transportation, car pools, or even bicycling. Nonetheless, fuel-saving attempts have had little influence on auto insurance, since, in spite of them, automobile owners are still paying for complete auto insurance coverage, which could seem unreasonable. Essentially, auto insurance has begun to represent a set cost, no matter how little or much a person drives.

Many insurance companies are now investigating innovative insurance ideas that compensate customers for decreasing fuel consumption and automobile usage and give them an opportunity to save on gas prices. Test schemes have already been initiated in some states and are being named either pay as you drive or pay per mile auto insurance.

Quite simply, pay per mile auto insurance suggests that your auto insurance payments are founded on how much you drive. Without going into detail, it would be reasonable to say that pay per mile auto insurance is intended to make automobile owners and insurance companies content. For one, this type of insurance makes sure that they don’t have to pay high coverage rates although they drive less. It mainly seeks to defend the interests of low-income drivers, who often tolerate a higher insurance rate than their mileage or accident risk demand. Pay per mile auto insurance would make auto insurance more reasonably priced for such drivers by granting them more power over the premiums they pay on their policies.

For insurance companies, discounts for those who drive less makes sense since the numbers bear fruit. Since those who drive less have fewer accidents, insurance companies’ costs would diminish much more considerably than their income.
Not only will pay per mile auto insurance help automobile owners save money, but also decrease pollution, again for understandable reasons. Since PAYD reveals the financial advantage of driving less, it is believed that it will lessen driving and congestion by more than 10%, according to experts.

The system defends against unscrupulous car owners who may try to adjust their odometers by adding a proprietary odometer with an embedded cell phone that frequently conveys your mileage to your insurance carrier. A substitute for this would be to mount a GPS device into an implanted phone to trace your real routes.

The advantage to utilizing GPS technology is that not only does the system keep track of your mileage, but it also records where and when you drive, although using GPS technology brings up privacy infringement concerns. If you travel in a congested area during peak hours it may cost more, but you could save by driving throughout off-peak hours.

No company has in fact taken the lead and confirmed that it will initiate the system for others to copy and maybe progress. Of the experimental programs now in progress, one involves OnStar, who has coupled with a national insurance company. Discounts are given to drivers driving fewer than 15,000 miles annually. In this program, the lower the mileage, the greater the discount. Sadly, the program is only currently available in Arizona, Indiana, Illinois and Pennsylvania.

Another program, being tested in Minnesota, is for those who own a ?96 or older model. A small electronic device is plugged into the automobile’s onboard diagnostics (ODBII) port. A sensor inside the device reveals how often and when the automobile is used and at what speed it is operated at. This data is then used to determine the discount.

Request your free Phoenix auto insurance rate quote right away, and discover how easy and convenient shopping for auto insurance can be.