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Drive Less, Save More

Pay-as-you-drive may be the future of car insurance and a way to save money -- that's clearly what insurers are suggesting -- but is it the best coverage for you?

If you're like most drivers, maybe not.

If you drive a lot, at the wrong times of day, or are reluctant to give up the left lane, there are many other car insurance discounts available. Not all low-mileage discounts require a pay-as-you-drive (PAYD) device, for example.

But few offer the savings potential that maxed-out PAYD plans do.

The gizmos used by car insurance companies promise discounts of as much as 50 percent. They come in two types:

  • An insurer-supplied device that plugs into your car's onboard diagnostics (OBDII) port and typically reports your car's mileage, speed, braking events and hours of operation.
  • A car manufacturer-designed telematics system, such as OnStar or Sync, that typically reports only mileage.

You'll find a roundup of current PAYD offerings at “ Pay as you drive car insurance: Who offers what.”

When your insurer rides shotgun

With all pay-as-you-drive (PAYD) plans, the easiest path to a huge discount is very low annual mileage. In some cases, the best rates go to customers who drive less than 2,500 miles a year.

But some programs may require that you address how you drive, not just how much. Even Progressive, a pioneer in the PAYD market with its much-hyped Snapshot device, says people who drive aggressively (and a lot) may want to pass.

Many customers of PAYD programs say braking measurements are the biggest surprise. William Parsons, a New Yorker who ended up with about a 15 percent discount after signing up for Snapshot, wonders if his premium cut would have been bigger if he hadn't been penalized for hard braking during his test period.

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