Drive Less to Save a Bundle on Car Insurance

If you’re like countless other consumers across the nation, you’re probably pinching some serious pennies right now. In these tough economic times, everyone is searching for creative ways to save a few bucks. Here’s one way to hang onto your dollars: consider walking to work or the store instead of driving. Not only will you save on gas and get some exercise-you also may qualify for a valuable discount on your car insurance.

Drive less, save more

Many insurers offer what’s called a “drive less, pay less” plan for drivers who rack up lower than average mileage on their cars each year. Depending on your insurance company, you could save up to 18 percent if you drive less than 7,500 miles a year. However, these plans are available only in certain states. If you’re looking to beef up your wallet, ask your insurer if you may be eligible for this low-cost coverage.

How does it work?

The “drive less, pay less” plan varies with each insurance company. While some insurers will take your word for it on how many miles you drive each year, others require proof.

Then there are those insurers who offer even greater discounts-but they closely monitor their drivers. For example, at least one insurer requires an OnStar subscription to be on the drive less plan. Although an OnStar subscription costs about $19 a month, you could save as much as 54 percent on your car insurance if you drive less than 15,000 miles a year under this plan. If you conduct a quick cost benefit analysis, you may find it’s well worth the extra $19 a month.

Another insurer offers an option to install a small, wireless device in your car to monitor your mileage as well as your driving habits. While it may be a little strange to know that “Big Brother” is always watching, you could save loads of cash with this plan.

Pay-As-You-Drive (PAYD)

Another low-cost car insurance plan that’s gained a lot of attention in the past year is Pay-As-You-Drive (PAYD). According to the Brookings Institution, PAYD can save consumers an average $270 per vehicle. However, while PAYD is popular overseas, it is not widely available in the U.S..

The Brookings Institution also points out the PAYD could save taxpayers up to $50 billion a year. If more drivers enrolled in this type of car insurance plan, everyone would drive considerably fewer miles. That would translate into fewer cars on the road each day, which cuts down on traffic congestion, car accidents, traffic related hospitalizations and emergency services-all things that cost taxpayers loads of money.

Green-friendly car insurance

Not only are these drive less, pay less car insurance plans good for your pocketbook-they’re also better for the environment.  Some experts say if PAYD were offered in all 50 states, it could reduce total U.S. greenhouse gas emissions by 2 percent. That adds up to a monstrous 99 million tons of CO2 per year.

If you want to steer clear of overpriced car insurance, ask your insurer if they offer a “drive less, pay less” plan. If not, you may consider switching to a company that does offer these low-cost plans.

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