Low Mileage Discounts and PAYD - A Fairer Deal for Consumers?
If you don't use your car very often you may qualify for a low mileage discount on your car insurance. Low mileage discounts are typically offered to drivers who drive less than an average number of miles each year. This type of discount may also be offered to people who carpool to work. Low mileage limitations are generally set at under 10 000 miles per year.
Many people feel that it is unfair to charge drivers who may drive vastly different distances each year the same insurance premiums. Surely drivers who accrue more mileage are far more likely to get into an accident than a driver who lives close to work or carpools? Are low mileage discounts enough to satisfy the driver who conserves his automobile use?
What are the benefits of low mileage discounts? It may seem as if drivers with low mileages are in some ways subsidizing other drivers because they pay more for every mile they drive. Typical time-based insurance seems to encourage motorists to use their cars as much as possible since they are going to pay standard rates anyway. Drivers who conserve on mileage may even decide to forgo insurance rather than pay high rates on a car they rarely use.
Pay as you drive insurance and low mileage discounts provide an incentive to drive less. This results in fewer accidents, quieter roads and less damaging air pollution. It also makes drivers more conscious of how much it really costs to run their cars and provides rewards for energy conservation. As an example, female drivers use their cars 40% less than men and have 40% fewer collisions but they only get minimal insurance discounts. PAYD discounts are the wave of the future.
Low mileage discounts are often not relative to the difference in miles. If a driver cuts his vehicle use by 50% his premiums are lowered by 5% to 10%. Pay as you drive insurance will make payments reflect not only usage but risk as well.
