Pay As You Drive Wins Best Insurance Product Award
In late August 2008 Australia’s First Pay As You Drive (PAYD) insurance policy was launched by Real Insurance, and on 21 October 2008 it won Best General Insurance Product at the Australian Banking and Finance Magazine Telstra Insurance awards.
This shows just how much the market needed a product of its type and it’s a certainty that more insurers will launch similar products over the coming year.
Real Insurance Pay As You Drive comprehensive car insurance is suited to people who drive less than average, and is available only to drivers over the age of 25. If you drive less than the average for people with the same insurance profile as you then you will pay less than for traditional car insurance. Australians drive about 15,000 kilometres a year on average, with around 23,000 km/year for regional areas and only 6,000 in city areas. If you drive significantly less than the average you can save up to 60% of your insurance premiums.
Customers prepay their insurance based on the kilometres they expect to travel in the coming year. It is the same concept as a prepaid mobile phone! If it looks as if you are going to exceed the anticipated amount of kilometres then you can top-up at any time as once you exceed your kilometres you will no longer be insured. Unused kilometres won’t be lost, as you can transfer them to the next year or be refunded. You get a sticker for your windshield to remind you when you need to top up your kilometres, and can receive SMS messages to your mobile.
If no claim is made against a Pay As You Drive policy for three consecutive years, customers will receive a rebate of 10 per cent of the total premiums paid during that time.
This policy recognises that currently low-mileage drivers are subsidising insurance costs for high-usage drivers, and recognises that there has been a change in motoring habits as environmentally-conscious people try to cut down on greenhouse gas emissions. Also high fuel costs and traffic congestion means many people are now minimising their vehicle use, and they deserve to be compensated for this.
Pay As You Drive has existed in countries like Israel, South Africa and Holland for some years, and they require drivers to have their cars equipped with monitoring devices that can be pretty costly. However in Australia the customers simply have to report the odometer reading of the car insured.
If you feel you use your car less than an average person this type of insurance is well worth looking into, as it has the potential to save up to several hundred dollars in premiums every year.