How does prepaid auto insurance work?
Having auto insurance is a requirement for every car owner. Therefore, when you purchase a car, you have to buy auto insurance. That isn’t a bad thing though, as insurance helps protect you when you are in fender benders or severe accidents.
Traditional insurance is an excellent option for you if you are a regular driver and commute long distances. The price of conventional insurance fits perfectly for such drivers. However, if your driving tendencies vary from season to season, it may not be the perfect option for you.
You may be asking yourself if there is a better option for you? An alternative which perfectly suits your driving tendencies. Well, you should check out the prepaid auto insurance card where only pay for the miles you drive. The prepaid auto insurance, also known as by-the-mile insurance.
Prepaid Auto Insurance – Explained!
Prepaid auto-insurance is the type where flat rates are offered for specific mileage. Every time you renew your insurance, the payments may change with the mileage. If a driver knows exactly how many miles he/she will drive in a specific season or month, then this policy can help them save money.
When prepaid auto insurance first started, the insurance companies would ask the drivers to provide the pictures of their car’s odometer. At every renewal, the company asked would ask the insurance buyer to give an image of their car’s odometer. Things have since evolved with time, and the company you will now purchase your by-the-mile auto insurance will use vehicle tracking devices. The tracking device is present in the OBDII of your car. Almost all new car models come with these trackers today. The company uses the tracker to monitor the number of miles driven.
At the time of your purchase of the prepaid auto-insurance policy, you will pay a one-time upfront fee. The amount you pay will cover the first few months. The number of months varies with the type of package you choose. The purpose of the one-time payment is that the policy provider does not have any of your vehicle’s driving stats or knowledge of your driving habits.
The initial down payment also helps reduce the monthly payments for the specific number of months. Once the negotiated months on the policy end, the monthly payments will increase. The reason behind this is that the credit you got from the one-time payment has ended.
Over the first month, the company gathers data about your driving habits and stats. It then adjusts the payments accordingly. After a few months, when the company has gathered enough data, you will have to pay a base rate every month plus additional charges for driving for miles above those you purchased.
The company requests all its clients to set up an autopay account. With an autopay account, you will never miss any payments. If you are not satisfied with the policy and wish to cancel it, you are free to do so. If you cancel the policy before completing the number of months you paid for, the unused amount of the payment will be returned to you.
The prepaid by-the-mile auto insurance is not available in all the states. The State of Texas is one of the few states that offer this type of car insurance.
Who Is the Prepaid By-the-Mile Auto Insurance For?
The prepaid by-the-mile auto insurance is perfect for you if your driving habits vary with every season. The policy terms and conditions vary with the type of company. Some companies design payment structures based on how you drive, such as speed and braking.
Why Prepaid By-the-Mile Auto Insurance Perfect for You?
Prepaid auto-insurance boasts numerous benefits to drivers. Want to know the many ways you can benefit from it? Here is a list of all benefits that you can enjoy with prepaid by-the-mile insurance.
Helps You Focus on Details
Most of us are not aware of how much we drive. Purchasing by-the-mile insurance will help you pay attention to the details. You will know exactly how many miles you drive and all other driving habits. This can help put less wear and tear on your vehicle as you are more cautious about overusing your vehicle.
Encourage Healthy Lifestyle
When you are paying for each mile, you will avoid driving for short distances. You will choose walking over driving, which is a very healthy practice. Buying this insurance policy will lead you to a healthier lifestyle.
Save Money with Car Insurance
When you pay only for the miles you drive, you will be able to save money. With traditional car insurance, you pay for miles that you do not consume. As this policy charges based on the mileage, you will save a good amount of money.