About two-thirds of drivers who sign up for pay-as-you-drive car insurance are saving money, but only about 1 percent of all drivers have signed up for such policies.
Many major insurers have begun offering such policies under names like Snapshot by Progressive, Drivewise by Allstate and Drive Safe & Earn from State Farm. The policies gather information about consumers’ driving habits to help determine how much they should pay for insurance. The idea is that good drivers, and those who drive less frequently, would pay less for their policy.Discounts range from a few percentage points for signing up, to up to 50 percent for people who drive very rarely drive their cars.
Still, 58 percent of Americans don’t know what pay-as-you-drive insurance is, according to a new report by InsuranceQuotes.com.
“Most Americans consider themselves better drivers than others, but few are willing to test their abilities with a pay-as-you-drive insurance program,” Laura Adams, an insurance analyst with InsuranceQuotes.com, said in a statement. “That’s too bad, because drivers are missing opportunities to save. Signing up can only help you – it can’t raise your premium.”
Pay-as-you-drive is not the only aspect of car insurance on which consumers are ill-informed. Nearly a third of consumers surveyed by Insurance.com in March failed a test on the basics of car insurance coverage and available discounts. The average cost of car insurance is $762 a year, according to Bankrate.
Nearly four in 10 drivers say they would never consider pay-as-you-drive insurance. Experts say this reflects worries about privacy as well as misconceptions about what insurers track. The privacy fears may not be completely misplaced: Researchers at the University of Denver recently found that by using speed and time data from real-word driving trips, they could determine the destination of many trips. “Customer privacy expectations … need to be reset, and new policies need to be implemented to inform customers of possible risks,” the researchers wrote.
Thirty-five percent of drivers said they’d only sign up for a premium discount of 25 percent or more. By comparison, 20 percent of drivers said they’d buy a self-driving car if it would dramatically reduce their insurance costs, according to a study by CarInsurance.com.