A new concept that some auto insurance companies are offering is the Pay-As-You-Drive (PAYD) option. The PAYD option allows people to pay sliding rates, based on how much they use their car. For example, a person who drives ten miles per week will pay considerably less than someone who commutes fifty miles each and every day. In essence, the person who drives less will have cheaper car insurance.
The car insurance company marks the mileage from your odometer, and then tracks your driving for a set period of time, based on their specific policies. Your premium is then based on the amount of miles you drive. Each auto insurance company has a different mileage level, so check with the company to determine if you would qualify for the PAYD option.
This PAYD option began in Europe and is now available in approximately 34 states. Not all insurance companies offer this option, but it is increasing in demand as people opt for public transportation, bicycling or carpooling due to rising fuel costs.
The PAYD auto insurance option also has other positive effects. For one, the environment will benefit and there will be less pollution. Secondly, with fewer cars on the road, there is less chance for accidents. And finally, drivers will not only enjoy cheap car insurance, they will also spend less on gasoline and auto maintenance.
Again, this is a very new concept to the American auto insurance industry, so it is not available from all car insurance companies right now. But it seems to be gaining in popularity, as it is a usage-based auto insurance policy, and fair to all drivers.