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Pay As You Drive insurance is taking off in popularity. This insurance program is based on the number of miles you drive. The less you drive, the cheaper your insurance premiums. In the current tough economy, the idea of paying less for what can be a big expense is appealing. However, Pay As You Drive Insurance does have some disadvantages.

First off, if you use Pay As You Go, you have to allow your use of your car to be monitored. Monitoring your mileage is not free, and you pay those costs, not the insurance company. Especially if you have a GPS device installed, the costs of monitoring can be greater than the savings in your premiums. Moreover, if you change companies, you will have to change monitoring devices, too. That means you should think twice before you change companies just to get what appears to be a lower rate.

Secondly, the companies that make the odometer tracking devices also charge a periodic fee for transmitting data. So, not only do you pay for the device, you pay to use it. This, again, possibly can eat away any savings from driving less when you use Pay As You Go.

Thirdly, insurers have had to develop a totally new price structure in order to offer Pay As You Go. This makes it easier for them to pass new costs on to drivers, again, canceling out any benefit derived from your frugal driving.

There are also concerns about how odometer data may be used. While it may be true that the monitoring devices will only provide the data needed to compute premiums, there is always the possibility that the monitors could be modified to tell the company not just how far you drive, but where, when, and how often. This information about where you could go could then be used to raise your rates, or for some other purpose entirely.

Pay As You Drive fans say that driving fewer miles will result in fewer crashes. However, there isn’t a simple correlation between how many miles you drive and how many accidents you have. Low-mileage drivers do not necessarily drive more safely. It is every bit as easy for a driver covered by Pay As You Drive to have an accident as it is for a driver covered by a traditional policy.

The potential financial benefits from Pay As You Drive insurance make the program look very attractive on the surface. However,drivers who are considering Pay As You Drive car insurance should contact a qualified insurance provider and ask detailed questions. Gather as much information as possible in order to accurately decide if Pay As You Drive insurance is right for you.

Tom Martens is the content syndication coordinator for Carinsurancesa.co.za. South Arica?s leading car insurance portal.

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