New Meaning to “Pay as You Go”

Insures have a bit of leeway when determining the premiums for your car insurance.Currently most companies base their decisions on demographic information such as: Age Gender Driving Record Credit Your car’s make and model Your deductibleThe type of ownership cost equation taken from this data might become anantiquated strategy sooner than later, at least for some insurers. Although insidershave advised that “it’s a long-run game,” new technology and a new philosophy areprompting insurers to re-think how premiums are determined.

The new technology: Measuring dashboard data. The new philosophy: a usage-based insurance model. Using this model, premiums would be determined by howmany miles a consumer drives and his driving behavior.

Several national companies have stuck their toe in the water of a pay-as-you-goapproach, and there are a number of techie start-up companies marrying theinsurance industries risk-pooling practices with glitch-free mileage tracking devices.The race is on.