Pay As You Drive car insurance

Iwannahurl

What are people's views on Pay As You Drive (PAYD) car insurance?

I recall hearing mention of it a few years ago, but I haven't thought much about the idea since. Whenever my insurance comes up for renewal I wonder briefly whether I should be paying as much as someone doing much higher mileage. Then I just pay up and forget about it, as I have no choice.

Motivated by policies to reduce greenhouse gas emissions from the transportation sector, "PAYD is a type of insurance that rewards car owners for driving less. PAYD auto insurance is priced at a cents-per-mile rate, rather than as the traditional lump sum premium".

A November 2010 study "found a significant correlation between miles driven and risk and confirms that mileage is an accurate predictor of risk, laying the groundwork for adoption of PAYD auto insurance. Overall, the study confirms the actuarial soundness of PAYD pricing and indicates that the PAYD approach would significantly reduce miles driven, auto accident losses, insurance costs and greenhouse house emissions, creating a win-win-win situation for insurers, consumers and the environment. Among the key findings are that PAYD can save consumers money and is a more accurate and fairer way to price insurance, and that PAYD reduces vehicle miles traveled (VMT), accidents and fuel consumption by 5-10%."

Here's a .ie webpage on PAYD, and an Aussie commercial ad on YouTube:

https://www.youtube.com/watch?v=j41uGouXvwM

monkeerina

fantastic idea!

unkel

Even better idea: basic 3rd party insurance should be "free" to everyone (paid by a levy on fuel). Isn't this in place in Oz / NZ or somewhere?

Antomus Prime

That sounds like a fantastic idea, they should adopt this method for tax also, why should someone doing 50 miles a week have to pay the same amount as someone doing 200 miles a week!!!

PAYD would be great for tax and insurance

TestTransmission

unkel wrote: »

Even better idea: basic 3rd party insurance should be "free" to everyone (paid by a levy on fuel). Isn't this in place in Oz / NZ or somewhere?

When cars are registered over there every year,compulsory 3rd party insurance has to be taken out at the same time. (I can't fully recall)

sogood

This would be similar to the suggested payment of road tax on petrol, thus, pay as you drive. It is fair, makes sense, ensures that if you drive then it is impossible to avoid paying your fair share of tax etc. But thats why it will never happen here, it makes too much sense and has been shown to work in many other parts of the world.

I must go now, I want to take a drive out to cloud cuckoo land.....

L1011

Without it becoming compulsary the only people that would use it would be low mileage drivers; it would in effect be a way for an insurance company to get low mileage drivers and no other ones not some way of encouraging lower use amongst the normal driver base.

From experience within my own family, the low mileage drivers are the ones who have had more accidents, due to inexperience and rusty skills. My mother does about 4,000km a year and has managed to cause significant panel damage to every car she's driven, for instance. This obviously isn't going to play out across the board but I'd be concerned that your insurance would be no cheaper as the only people using the policy would be the dangerous potterers and people using it on high performance rarely used "toy" cars.

Also, it'd be hard to accurately track mileage. Going by odometer readings can lead to faking; going on GPS can cause ridiculous inaccuracies on city driving and could cause problems when driving on roads the unit doesn't know about. Neither allow you to let someone else drive the car under their driving other cars clause without you getting charged.

Putting tax and TP on fuel would work if we didn't have the issue of NI to deal with. If we could convince them to do it too, it'd be a great idea. Its used in parts of Australia, basically means that if you don't want extra cover you can just drive without worrying about insurance, if you want to protect your car / yourself better, you can pay.

Antomus Prime

sogood wrote: »

It is fair, makes sense, ensures that if you drive then it is impossible to avoid paying your fair share of tax etc. But thats why it will never happen here, it makes too much sense and has been shown to work in many other parts of the world.

Never a truer word said!!!!!!

oldyouth

unkel wrote: »

Even better idea: basic 3rd party insurance should be "free" to everyone (paid by a levy on fuel). Isn't this in place in Oz / NZ or somewhere?

So when an absolute twat causes a multiple pile up because of poor driving/drink/drugs/speed or whatever, you would be happy to hear that petrol is going up another 20c overnight to top up the compensation fund in addition to the basic levy that is applied?

It's no different to the current system that we have whereby the good and bad pay similar amounts to pay for the losses caused by the few

CiniO

I absolutely disagree with the idea...
I drive a lot (might be more then 50k kms a year), and I don't think I'm more likely to cause accident, than someone doing 3k kms a year.

Compare it with sports.. Who is more likely to suffer injury during sports (f.e. skiing). Some beginner that skis few times a year, or a professionall, that skis everyday?

Alanstrainor

CiniO wrote: »

Compare it with sports.. Who is more likely to suffer injury during sports (f.e. skiing). Some beginner that skis few times a year, or a professionall, that skis everyday?

What about the pro who skis a few times a year?

CiniO

Alanstrainor wrote: »

What about the pro who skis a few times a year?

Someone who skis few times a year is not a pro ;P


In real - I just can't see any link between number of kilometres driven and the chance to cause an accident.
I personally know drivers who drive very little and crash at least once a year, and I know the drivers that drive a lot, and never crashed.

unkel

oldyouth wrote: »

So when an absolute twat causes a multiple pile up because of poor driving/drink/drugs/speed or whatever, you would be happy to hear that petrol is going up another 20c overnight to top up the compensation fund in addition to the basic levy that is applied?

It's no different to the current system that we have whereby the good and bad pay similar amounts to pay for the losses caused by the few

I guess it would only work if all drivers had basic driving skills. It would not work in Ireland so

Stheno

anthonyk.is wrote: »

That sounds like a fantastic idea, they should adopt this method for tax also, why should someone doing 50 miles a week have to pay the same amount as someone doing 200 miles a week!!!

PAYD would be great for tax and insurance

Great for tax but punishing for insurance imo, see below.l

MYOB wrote: »

Without it becoming compulsary the only people that would use it would be low mileage drivers; it would in effect be a way for an insurance company to get low mileage drivers and no other ones not some way of encouraging lower use amongst the normal driver base.

From experience within my own family, the low mileage drivers are the ones who have had more accidents, due to inexperience and rusty skills. My mother does about 4,000km a year and has managed to cause significant panel damage to every car she's driven, for instance. This obviously isn't going to play out across the board but I'd be concerned that your insurance would be no cheaper as the only people using the policy would be the dangerous potterers and people using it on high performance rarely used "toy" cars.

Agree with you on this, I do 25k miles a year (the past two years) and I've been fortunate enough to have no claims in that time.

So PAYD would penalise me, but the current system penalises me by loading my premium based on my mileage.

If I do as much mileage as someone else will do in ten years in one, and don't claim surely that is indicative of driving experience and therefore a lesser risk?

No problem with PAYD on tax, that's fair, but surely the more you drive and the less accidents you have, the less a risk you are? This really gets on my goat!

mathepac

sogood wrote: »

... But thats why it will never happen here, it makes too much sense and has been shown to work in many other parts of the world...

Strangely the NCT has been implemented to reduce the number of dangerous wrecks on the road, the theory and practical driving tests have been introduced, the new restricted driving licence is coming in next year for newly qualified drivers, etc. Lots of new measures to make driving on our roads safer introduced, now to reduce the legal BAC in line with other countries, introduce roadside drug testing, etc.

L1011

Alanstrainor wrote: »

What about the pro who skis a few times a year?

They'll be extremely rusty and at high risk of seriously injuring themselves.

Stheno

MYOB wrote: »

They'll be extremely rusty and at high risk of seriously injuring themselves.

Much the same as very low mileage drivers? Who not only risk themselves, but other road users?

L1011

Stheno wrote: »

Much the same as very low mileage drivers? Who not only risk themselves, but other road users?

Well yes, seeing as that was the point of my rather rambling post last night.

Mountainsandh

I'm from France and my mum was recently telling me about the PAYD insurance scheme over there. It's really useful over there for the people who have a secondary home in the countryside : keep a car there, get to there by train, but drive around in your own car at week-ends/holidays. Also for the people who may live/work abroad part of the time : air hostess, back in the country for a few days, use the car. It's not about how good or bad a driver they are, it's about how much use they make of the car.
I for one would love such a scheme : I'm in the country and in winter, feel the need for a 4WD, but don't really want to be driving that all year round. A waste to insure 4WD same as any other car when I might use it 3 weeks in the year.

Regardless of driving ability, btw.

Anan1

Mountainsandh wrote: »

I for one would love such a scheme : I'm in the country and in winter, feel the need for a 4WD, but don't really want to be driving that all year round. A waste to insure 4WD same as any other car when I might use it 3 weeks in the year.

Regardless of driving ability, btw.

You can just transfer your normal car policy onto the 4WD as needed.

djimi

CiniO wrote: »

I absolutely disagree with the idea...
I drive a lot (might be more then 50k kms a year), and I don't think I'm more likely to cause accident, than someone doing 3k kms a year.

Your experience might make you less likely to be the absolute cause of an accident, but by the law of averages you are more likely to be involved in an accident, and from my experience its is very hard not to get lumped with some part of the blame for a claim (unless you get hit from behind or something), so if youre involved in an accident then your policy is likely to take some kind of a hit, ergo the more you drive the more of a risk you are to an insurance company.

Edit: Also, being a professional driver does not make you safer. This is not meant as a dig at you personally because I dont know you, but the amount of taxi drivers, bus drivers, truck drivers etc who do the most stupid things on the road because they are overly complacent about their ability absolutely astounds me. The other night driving home from Dublin was an awful experience as it seems any car on the road that doesnt have a yellow roofsign automatically becomes invisible to taxi drivers and they treat them as such.

Mountainsandh

Anan1 wrote: »

You can just transfer your normal car policy onto the 4WD as needed.

Yes Anan1, this is what we're going to do, bit silly to have to do the changeover every time though, if the PAYD was available we'd go for it.

Anan1

Mountainsandh wrote: »

Yes Anan1, this is what we're going to do, bit silly to have to do the changeover every time though, if the PAYD was available we'd go for it.

All things being equal, the changeover costs nothing and only takes a few minutes. PAYD would be better if you needed to use both cars for a period, but other than that I don't see any advantage for you?

Mountainsandh

Well, in our situation, 4WD would be only for snowy days, or when there are floods, or if we're heading in the countryside rather than heading to town. Using the regular car to go to town/commute is of course cheaper and more comfortable. Sooooo.... With the insurance switch, I would have to stick my nose out the door in the morning, check how snowy/icy/floody it is, then quickly ring insurance, then head to work ? Then the next morning/same night, ring insurance again to switch back ?

As it happens we are choosing to go for a slightly bigger but more comfortable 4WD that we can use in more situations, and will get rid of the second regular car. That means another 4WD being in use more than it should really have been had that PAYD been available.