King County Washington has received a $1.9 million federal grant to fund a Pay-As-You-Drive program according to an article on the county website. The program “will collect comprehensive data about driver behavior when insurance rates are based on actual vehicle usage”. Considering this program is going to last five years were likely not going to see this type of model for quite some time.
The program will enroll participants who’ll “be provided with a GPS-based device that plugs into their vehicle's diagnostic system. The device will then track where, when, how much, and how fast the vehicle is driven. The data will be used to develop the PAYD insurance product and to price insurance premiums”.
Of course those who drive a lot for their jobs will likely not want to use such a system. I wouldn’t be surprised if down the road insurers start offering the PAYD model as an alternative to the current model.
What are your thoughts on this type of insurance model and what flaws do you see?
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