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Article by K D Garrow

Many people are not aware that there is more than one way to get insurance for driving. You do not have to stick with the most common approach of buying an annual policy that covers you for all the driving you do over the course of a year. For many people this is not an economic or viable way of getting insurance and it would work out much more expensive to do it that way. The main alternative is some form of temporary cover and the most interesting option for many is pay as you go car insurance.

What happens with pay as you go cover is that you just pay for the driving you actually do. You may well wonder why you would want to do that. Well, many people do not have regular patterns of driving where they take their car to work five days a week and do some running around at weekends. Some people do not work full time or do not always need a car to get to work or do their jobs. One group in particular who often fall into this category are young people.

For young drivers car insurance can be extremely expensive. Particularly if you are looking for an annual policy to cover what the insurer perceives as average driving patterns. Many young people live with parents and perhaps only work part time or sporadically. The result is that they may need to do quite a bit of driving one month but nothing at all the next. Pay as you go cover is a way or just paying for the driving you do each month.

The cost of premiums for any auto cover is worked out based on many factors. As well as obvious ones like the age and size or car you drive, they will consider where you live and perhaps how much mileage you are likely to do over the year. It stands to reason that the more you drive and the more time you spend on the roads, the greater your chance of having an accident and making a claim, statistically at least. Certain roads present a higher risk to insurers than others and driving at certain times of day compared to others can be more risky too. These are all things that are considered by insurers and by using pay as you go cover you can bring down the cost of premiums if your driving habits are relatively low risk.

The basic principle behind this option is that you are provided with a satellite device by the insurance company. They arrange for this to be fitted into your car, at no cost to you, and it enables the organisation to record exactly how much mileage you do and where and when you are doing it. You then get a monthly bill based on this actual activity, rather than some estimated average that you may or may not do.

Pay as you go car insurance can be a highly cost effective and sensible solution for young people or other drivers who have irregular needs when it comes to how much driving they do. It is totally flexible and allows you to only pay in proportion to the amount of driving you need to do.

(Best Syndication) Auto insurance is one of those requirements for driving a car, along with a valid driver’s license. Although indemnity obligations may vary, every state except New Hampshire requires some sort of policy before you can drive on public roads. In California, drivers may have their vehicle impounded if caught driving without the basic coverage. Typically, drivers are required to cover the loss and damage to the other car. The obligatory policy protects the “third party” and the financial consequences of their loss, damage or injury caused by your vehicle. Most of the time it is optional to cover your own vehicle against damage. Of course the law may vary according to state, so check with your insurance broker to determine your minimum requirements. There are a number of factors that determine the insurance rate. Age, driving record and type of car help underwriters calculate the risk to the insurance company and the premium amount. In some instances, the rates may be set by law. When the premium is not set by the government, insurance companies usually determine the rate from the calculations of an actuary based on statistical data. Since women get in fewer accidents, their cost of coverage may be lower. But if the woman drives long distances to work, this may adjust the rate upward. Liability insurance covers claims against the specified car owner and those who may drive the car. The coverage may exclude others at the policy holder’s address unless they …
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Pay as you go auto insurance

Question by Anissa: Is the criteria for getting auto insurance and the amount you pay fair?
When I bought my new car, I decided to insure it. I did not have my other car insured and I know this is wrong. I never went without full coverage before in my life and I was driving with NO insurance-badddd girl. When I went to get insurance for my new car, not only the regular things were used, but my CREDIT RATING was used for determining the cost. My credit is good, but as we all know, just one search into your rating effects how you look.

With all that is going on with finances these days, is it right or fair to use someone’s credit rating to increase the cost for auto insurance? Who are these insurance companies anyway, that feel credit is a reason to charge more or less, so long as they get paid? Do you think this is going over board as far as a persons privacy is concerned and to punish somebody for having financial troubles by raising the auto insurance payments, instead of helping a person by charging a set rate?

Best answer:

Answer by Margarita D
Shopping around for insurance will not affect your credit score. When you are shopping for automobile insurance or homeowners insurance (in some states) we do pull an insurance score. While an insurance score is related to a credit score, it is considered a “soft” pull and does not bring down your score since the insurance company is not “granting” you credit. The insurance score is basically to see how well you handle credit which is an indicator of how responsible you are. If your score shows that you have “bad” credit your insurance rates will be much higher than “good” credit. Insurance companies base the impact of credit on actuarial studies that show that drivers with bad credit file more claims. Based on this the insurance companies now use the insurance score as of a myriad of factors used to price the risk accordingly. Some of the other factors that are also used, age, sex, marital status, length of driving experience, prior insurance, motor vehicle record (shows suspensions, revocations, traffic convictions, etc.), clue report (shows accident claims) of all vehicle operators, annual mileage, daily mileage and use of the vehicle, year, make and model of the vehicle, your location down to the zip code, any discounts that you are entitled to such as homeowner, etc.

Essentially the rates are now totally computer generated and can sometimes involve hundreds of factors. Overall I do believe the rates are fair. Insurance is about spreading the risk in a manner that is supported by actuarial data. Furthermore many people in spite of very real challenges to their economic livelihood have managed to maintain good credit and demonstrate above average responsibility — insurance scores reward this behavior.

Your credit report will reflect that an insurance company pulled the report but the numerical impact to your score is negligible (i.e. much less than if a credit company were pulling it) and most credit purveyors understand the difference and will rarely even ask about it.

I hope this information helps. Good Luck

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