One of the hottest trends in auto insurance is pay-as-you-go plans that can provide qualified drivers with savings of up to 30 percent on rates. Examples of pay-as-you-go insurance policies include Progressive's Snapshot, State Farm's Drive Safe and Save with In-Drive and Allstate's DriveWise. Typically, you install a device into the diagnostic port of your car that tracks how many miles you drive and when, how fast you accelerate and turn and how hard you brake.
While it's good news that these plans can save you money on car insurance, there are some details to be aware of in the fine print. Here we highlight three of them, as discussed during Insurance.com's recent Tweet chat on pay-as-you-go insurance.
1.Can the device damage my car? It could potentially drain battery if don't drive a lot
@CoverageQueen: The device uses a certain amount of current from the vehicle's battery even when the vehicle is not turned on. Care should be taken in using the device in vehicles that have old or weak batteries or that may go extended periods without being started, according to Progressive's Snapshot website.
2. Will my rates go up? As with most car insurance plans, there's always exceptions
@CoverageQueen: Though pay-as-you-go insurance providers say that your rates will not increase should you fail to meet the requirements, there are a few exceptions. For instance with Snapshot, if you live in Rhode Island, you may see an increase in your rate – up to 9 percent – based on your driving, according to the company website. If you can't change your driving performance to reduce your rate, you can cancel at any time, and Progressive will stop using any driving information you shared with them. Again, with Snapshot, drivers in Alabama should be aware that if they leave the program, up to 12 months of data may be used for renewal pricing purposes.
3. Do the savings on car insurance apply to all types of coverage? Not always
@CoverageQueen: Typically, savings will not apply to all types of car insurance, and each state has its own laws pertaining to how this is administered. For instance, Snapshot applies the savings to premiums for bodily injury, property damage and collision, depending on state regulations.
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