Pay As You Drive Car Insurance: A Good Idea?

Every six months you get a bill in the mail from your auto insurance company.   After your eyes glaze over 12 stapled pages of different line items of coverage and boiler plate language, you get all the way to the bottom to see your semi-annual premium.    Maybe if you are a really good driver according to the insurance company, you’ll get some sort of good driver discount which nobody can explain the math behind anyway.   Or, you can reduce your premium by buying more insurance through your auto carrier like your home insurance.   So you start to wonder . . . should there be a better way to come up with the correct premium on your auto insurance?

Let’s face it, two people could each drive 5,000 miles during the year.   One person racked up their miles by sifting through the morning traffic to and from school dropping off and picking up their kids every day.  Bumper to bumper, they stop and go having potential near miss accidents almost every week.   Another person racked up their 5,000 miles by doing one long cross country trip over the stretch of open highway across the United States.    While they both reported the same number of miles over the course of the last year, who was really the bigger risk to the insurance company?

Insurance has always been designed to protect risk.   Until now, there has never really been a good way to test who might be a better driver in all kinds of situations.  Some companies now like AAA are now offering a new type of insurance called Pay As You Drive Insurance (PAYD).

The insurance companies utilize the latest and greatest in technology by strapping a special electronic device that easily plugs into your car.    The device can record things from how hard you brake to how many miles you are driving.   After a period of time with the device, the insurance company can actually issue you your rate based upon the results from the device.    Would this be better or worse off for you?   Would it change your driving habits?

As with any industry, I think you’ll see insurance companies evolve their auto policies to help keep their costs down while rewarding those customers that help them keep their costs down.   If you think you are a really good driver, this could be something to check out!

Visit www.oXYGenFinancial.net to request a consultation with the leading personal financial advice experts for Generation X and Y in the country.

Written by: Ted Jenkin, CFP®, AAMS®, AWMA®, CRPC®, CMFC®, CRPS®

Co-CEO and Founder oXYGen Financial, Inc

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About the author  ⁄ Ted Jenkin @ Your Smart Money Moves

Ted Jenkin @ Your Smart Money Moves


My friends and family all think I’m a workaholic, but I say I’m just a guy that loves to help people do better in life.

My mother is still the only one that calls me by my real name Theodore Michael, my wife calls me Teddy, but for the rest of you it is just plain old Ted.

Ever since I was a little kid, I always loved money and being an entrepreneur. In fact, I still have cassette tapes of me talking to my grandmother at the age of five and my mother tells me all the time how much I played with money as a kid...

Read More About Ted Here

Ted Jenkin is a frequent guest columnist for the Wall Street Journal and Headline News Weekend Express. He is the co-CEO of oXYGen Financial. You can follow him on LinkedIn @ www.linkedin.com/in/theceoadvisor or on Twitter @tedjenkin.

Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. oXYGen Financial is not affiliated with Kestra IS or Kestra AS. Kestra IS and Kestra AS do not provide tax or legal advice.

The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Investment Services, LLC or Kestra Advisory Services, LLC. This is for general information only and is not intended to provide specific investment advice or recommendations for any individual. It is suggested that you consult your financial professional, attorney, or tax advisor regarding your individual situation. 

Background and qualification information is available at FINRA's BrokerCheck website.

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