The auto insurance industry is constantly evolving to serve its customers. The shift from paper-based insurance to a digital platform is a great example of this evolution. Insurance car per kilometer was born out of “Pay as You Drive” car insurance. It’s actually a refined version of the latter. You may be able to purchase comprehensive car insurance at a cheaper price. It might suit you if you don’t drive your car very often or only drive short distances. What is car insurance by the kilometer and how does it work? More details here!
Update on “Pay as You Drive” car insurance and how it works
First of all, you must understand that auto insurance ” pay as you drive » offers you the same features and types of coverage as traditional all-risk automobile insurance. However, you only pay for the kilometers you plan to travel. This is different from traditional auto insurance, where your premiums aren’t always affected by how far or how often you drive. Pay as you drive car insurance is generally designed for people who drive 14,500 kilometers or less each year.
Some providers offer specific car insurance policies to driving. However, there are other ways to save with a traditional global policy if you don’t drive very often or far. For example, 54% of car insurance providers currently offer discounts or reduced premiums for drivers with low miles to cover.
Most providers will ask you how many miles you expect to drive each year and your premium will be calculated based on that. You then give them the reading of the odometer of your car at the start of the policy.
Your insurance is often valid between your beginning odometer reading and your scheduled ending odometer reading. If you need to make a claim and your odometer reading is lower than your starting reading or higher than your ending reading, you will have to pay an additional deductible. You can usually request a increase in kilometers traveledbut it may increase your premium.
What to understand about car insurance per kilometer?
L’car insurance per kilometer is another type of insurance similar to “Pay as you drive” car insurance. These types of policies charge you for the actual distance you travel at a rate per kilometerinstead of being based on the number of kilometers you plan to travel.
The provider usually sends you a device that tracks this. In other words, this new comprehensive car insurance allows customers to pay a cost to cover their vehicle while it is parked and only a few cents per kilometer while they are driving.
“Per-mile insurance uses driving data to measure distance and charges customers based on distance traveled,” explained Andrew Wong, Founder and CEO of KOBA Insurance. Thus, in practice, each insurer sets a rate per kilometer for a given driver, then invoices it depending on the number of kilometers which he goes through every month. »
Pay-per-mile auto insurance typically charges an upfront fee that covers your car when you’re not driving, in addition to a cost per kilometer each month.
Is the pay per kilometer policy cheaper?
A driving-based insurance policy will often be cheaper than a comprehensive policy with the same insurer. This is particularly so if you do not use your car or drive infrequently. But be aware that you may be charged an additional deductible if your mileage is outside the mileage range when you make a complaint.
Another option is to find a car insurance provider that offers premium reduction for low mileage drivers or update your estimated mileage and see if that lowers your premiums. It may be worth getting a few quotes to see which option is the cheapest for your situation.
To read also: Gray card crossed out how long to drive with it?
What are the pros and cons of pay-and-drive car insurance?
Before subscribing to a pay-for-drive policy, weigh the pros and cons.
- Can potentially save you money on your premium
- can offer a coverage similar to a comprehensive policy
- Generally allows the flexibility to top up your miles as needed.
The inconvenients :
- only suitable if you drive less than average
- You may be charged an additional deductible if you exceed your mileage limit
- You may have to pay more if you top up your kilometers
- You can not ” set and forget like other policies, as you’ll need to make sure you stay within your odometer range to avoid the extra excess.
Only then can you decide whether or not to take out this insurance.
What to remember?
The idea is that drivers pay for the number of kilometers they travel, not for the type of car they own. This new model will be used to calculate your premium instead of using a traditional system where you are billed based on the make and model of your vehicle.
The operation is simple: you pay fixed monthly fee, which includes all driving costs such as gas, insurance, maintenance and depreciation. You then buy a device called ” On Board Unit or “OBU” which plugs into your car’s computer system to track the distance you’ve traveled.
The best thing about this new system is that it rewards drivers who drive less by charging them less for their bonuses.