Pay as you Drive Insurance

Progressive Insurance is now offering "pay as you drive" or PAYD insurance. Progressive will put a little tag on your car and it knows how often you drive - which, in combination with your safe driving record - determines your premium. Here are some potential benefits from our friends at Wikipedia:

• Commercial benefits to the insurance company from better alignment of insurance with actual risk. Improved customer segmentation.


• Potential cost-savings for responsible customers.


• Social and environmental benefits from more responsible and less unnecessary driving.


• Due to the 24/7 aspects of vehicle location, it enhances security - both personal security and vehicle security. The GPS technology could be used to trace the vehicle whereabouts following an accident, breakdown or theft. [1]


• More choice for consumers on the type of car insurance available to buy.


• The same GPS technology can often be used to provide other (non insurance) benefits to consumers,e.g. satellite navigation [1]


• Social benefits from accessibility to affordable insurance for young drivers - rather than paying for irresponsible peers, with this type of insurance young drivers pay for how they drive.

What interests me about this is the potential companies have to encourage green behavior. Think about it. If you drive less, you not only save gas, but also your premium. For some, this may be enough incentive to get them to bike or walk to work one day a week. It may also encourage parents (paying those big premiums) to encourage their children to drive less. If this product is successful, Progressive will win kudos for setting a new standard for risk mitigation in their industry and for changing their customer's behavior. Wow, that's pretty powerful.

So what other behavior changing ideas are out there?

Image from BBC News