What is the Difference Between Annual Auto Insurance Policy and Pay-Per-Mile Insurance?

Reader’s Question:

One of my friends are subscribing for the usual annually paid automobile insurance policy while another friend of mine has the “pay-per-mile” automobile insurance. How does the latter automobile insurance differ from the former in terms of affordability?

Annette

Deer Valley, AZ

Pay-per-mile automobile insurance gives the policyholder the chance to control his/her policy premium. This is, while the policyholder can still claim for the same amount when he/she gets involved in a roadway accident. This type of automobile insurance depends on the number of miles a policyholder travel using the cars he/she insured. Those who use their insured car on a particular schedule in a year will benefit to pay-per-mile automobile insurance. Hence, the annual amount of the automobile insurance policy a policyholder needs to pay will be converted to a “per-mile” fee. Insurance companies employ different ways to track the number of miles your car already travelled.

Some civil organizations have advanced this type of automobile insurance because its latent function is to lessen traffic congestion and pollution from automobiles. With this, many insurance companies offering the pay-per-mile automobile insurance give discount opportunities to those whose insured cars travelled short distances. Many insurance providers give discounts to their policyholders that travelled less than 15,000 miles a year. Compared to that of annually-paid automobile insurance, pay-per-mile automobile insurance lets policyholders to avail 40 percent discount annually, which can be converted up to hundreds of dollars.