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If you are searching around for ways to save on insuring your vehicle, you have probably come across all kinds of different types of coverage and insurance types. With all of these, you pay for your coverage for defined period of time.

Pay-as-you-drive insurance is a bit different. Rather than paying for a period of time (a month, 6-months, a year), you pay only for the miles you actually drive.

About Pay-as-you-drive Insurance

It’s been around a while, but only now is it catching on in America.
The idea is simple: you pay for every mile you drive, because that is when you need most of the coverage. This obviously doesn’t include comprehensive coverage and any other non-driving situation.

How Miles are Reported

Since you pay by the mile, you and your insurer have to have a way of settling on a number.

Black Box

New technology is partially what is fueling this increase in companies offering pay-as-you-drive plans.
One such innovation allows for GPS-enabled chips to be installed into your car’s computer. These automatically report your mileage to the insurance company.
(Aside from the insurance itself, you can also save money because your car will be easier to recover if stolen, thus reducing the chance that the insurer will have to pay to replace a vehicle.)

OnStar

This is the other big technological innovation that can help you save on insurance. Since this is for GM vehicles, you should get insurance through GMAC. This way, OnStar will automatically report your mileage to GMAC. You can even call them at any time to see how much you owe at the moment.

Checkups

With this system, you meet with a mechanic, agent, or some other specialist that your insurer selects. They check your mileage each billing period and then the insurer sends you a bill.

Honor System

Admittedly, this is rare.
Smaller insurers will allow you to report your mileage without confirmation. However, should you be found to have not reported the accurate mileage, you will be denied claims and probably dropped as a client.

Is Pay-as-you-drive Car Insurance Right for You?

Unfortunately, this might not even be available to many people because of the limited areas and companies offering pay-as-you-drive insurance.
Currently, State Farm, Progressive, and GMAC are all offering usage-based systems. (more…)

Insurance has long been split on the gender issue – not whether they can use gender to determine rates, but if men should be charged more than women or vice-versa. The ethical question, however, has been debated by governments recently, leading to several industry regulations changes that now restrict the use of gender statistics in determining insurance prices.

The Case Against Gender Rating

Gender rating, as it is known in the insurance industry, is the practice of using statistical analysis to assess risk based on gender and then to charge for insurance accordingly.

Traditionally, this has led to higher prices in health insurance for women as compared to men, and lower auto insurance premiums for women as compared to men.
Health insurance, and to a large degree auto insurance also, is largely determined by two statistical categories: age and gender.

While long practiced, people outside the industry have been critical for decades of this practice that they argue is sexist, archaic, and ineffective.
One activist argued that, “how effective this is doesn’t really matter. The fact is, whether gender rating benefits men or women, it is unethical. It sets a bad standard for the way we do things in this country, where there are few women CEOs and women make far less money than men doing the same jobs.

The statistics are pretty prosaic and don’t seem to back up the rates,” a former insurance actuary said, adding, “there are far more effective ways to determine rates.” Industry-hired actuaries dispute this claim.

California Regulators Ban Gendered Pricing for Health Insurance

In 2010, activists struck a big blow by pushing the state legislature to pass a law that prevents health insurance companies from factoring in gender when determining health insurance rates. The efforts were aided by large national reform on an industry that many feel discriminates unfairly and fails to protect consumers, since they are motivated entirely by profits.

The new law takes effect far before the date a federal ban will come into effect: 2014. Women should see there health insurance rates come down by as much as 30% at this time, as has been observed in California. (more…)