Why Pay-Per-Kilometer Car Insurance is a Bad Idea For You!
Why Pay-Per-Kilometer Car Insurance is a Bad Idea For You!
Recently, some insurance providers have gone way too far in introducing innovative measures like pay-per-kilometre for car insurance.
Previously, insurance has always been calculated traditionally. A fixed amount is set for six months or a year.
Nowadays, the pay-per-kilometres policy is being introduced.
It seems that it is better than traditional insurance. Upon closer look, however, that is not the case. A new and so-called ‘efficient’ method of insurance has been introduced in the market for those who do not know.
Interestingly, this is challenging the conventional way of insurance.
But, you only challenge something you are sure of beating. As a result, this pay-per-kilometers policy is set to lose this challenge – and that too with a high margin. This article deals with some issues with the pay-per-kilometer system and why you are better off without it.
Also, we highlight how traditional insurance option is so much better.
Pay-per kilometer car insurance is a new type of insurance that is starting to be commercialized in many countries. In this type of coverage, the premium is fixed according to the number of kilometers you drive. Instead of fixing an annual premium, it varies with the distance travelled. Generally, it is used besides other risk factors traditionally used in pricing. As a result, through this vehicle policy, people who drive more will pay more as they are more exposed to the risk of an accident.
Generally, a traditional auto coverage contract depends upon several variables related to either the driver’s or the vehicle’s profile. However, the traditional car insurance contract does not consider the use of the car. This is the main difference between the two types of insurance.
It largely depends upon how much you drive your vehicle. For someone who does not drive much, this type of auto coverage might be useful. However, if you happen to be someone who drives a lot, this type of insurance might not be the best option for you!
Again, it depends on your insurance provider. While some providers require you to place a device on your car, others take your odometer rating. Through this, auto coverage providers can observe your driving speed and behavior. However, people are normally very unwelcoming of such invasive measures. They potentially monitor and could potentially collect data for other purposes. To read up more on Auto Insurance and Discounts visit this link: Pew Research Center
Well, this is probably the most important factor for you. Many reviewers have said that the claims experience with the pay-per-kilometre was less than ideal. Also, some people even reported that prices went up after almost six months. Thus making traditional purchasing policy much easier.
Pay-per-kilometer is more of a marketing gimmick rather than a valuable innovation.
Nonetheless, if you are still fascinated by it, we feel for you!
We hope that the short FAQ section above answers your top-of-the-mind questions.
The above portion is just a first look at the pay-per-kilometer car insurance, which seeks to educate you on what it can get you into.
If you wish to find out, How to effectively compare insurance Dubai? Read this!
Also, the answers above will help you make better decisions about choosing an option that works best for you.
This takes us to the next section of this article: Problems with pay-per-kilometer
Problems with Pay-Per-Kilometer Policy
Well, think of it this way. Let’s say that you have somehow opted for pay-per-kilometer coverage. Now you are very excited as you are looking forward to this innovative insurance method and cannot wait to save money. However, do you think you can be sure that you will drive a certain kilometer in your car? You can’t! Just like we have to deal with the unpredictability of this life, there is bound to be uncertainty in the number of miles we travel in a day, month or year. Because pay-per-kilometer calculates based on your travel trends, there is likely to be a strong level of unpredictability and anxiety.
Generally, some auto coverage providers require you to place a device in your car. More often than not, it becomes quite inconvenient to place a device from your insurance provider in your automobile while driving. While insurance companies providing pay-per-kilometer will tell you how their device is super convenient and will fit comfortably in some part of your car, we beg to differ. No one else can understand the inconvenience it can cause you!
Generally, many of the devices that the insurance providers provide to calculate the insurance premium are usually known to monitor your habits and behaviors. Sadly, you cannot be 100% sure of how these devices collect your data. And there is a serious concern regarding the extent of information these devices usually collect. Also, as the devices are installed for monitoring, it raises a serious question regarding your legal rights and privacy.
Seems like a lot of insurance providers like to sell the idea of cheaper car insurance. However, through the pay-per-kilometer mechanism, the premium increases with the increase in the number of miles you travel. Understandably, this is bad news for people who use their cars for long distances. As a result, traditional insurance is more suited for a relatively better premium for the drivers.
5. Poor Claims Experience
The effectiveness of an insurance policy is largely dependent on the claims experience of its clients. Surprisingly, claims experience for clients through pay-per-kilometer is not very positive. And interestingly, there have been reports from some users stating that their premium prices went up instead of going down.
Thus, eliminating the claim of cheaper insurance! Ultimately, this entirely dismisses the case for the efficiency of the pay-per-kilometer mechanism for car insurance.
These are just some of the issues with the SO-CALLED new and effective premium mechanism for insurance. All of the points mentioned above seek to show the total inefficiency of the alternative mechanism of calculating the premium.
In contrast, traditional insurance offers several advantages for YOU – the final buyer! This takes us to the final section of this article: Advantages of Traditional Insurance.
Benefits of Traditional Insurance
Unlike the ‘new’ car insurance, with traditional car insurance, you can accurately predict your insurance premium cost.Also, it reduces uncertainty which certainly is good news for you.Above, all you know exactly the amount of money you need to pay for your insurance cost.
Having a one time fixed insurance premium is so much convenient as you do not have to constantly worry about the miles you have traveled.Additionally, the fixed nature of this policy helps you in managing your finances with accuracy!
Above all, this easy feature convenience as your premium amount does not fluctuate.
Knowingly, traditional insurance is non-invasive because of the way it calculates premiums.For this, you usually can be sure that it will not unwelcomingly eavesdrop or collect unnecessary data from your car.Basically, you can be sure that your car data is totally safe with you!
Generally, with traditional insurance to drop certain add-ons that add extra costs to your premium cost.For instance, if you feel that a certain add-on is not suitable for you and will, in fact, the useless cost to your premium, you can choose to completely exclude that from your plan.
As a result, your premium costs drop significantly!
To know how you can lower your insurance cost, read The cheapest car insurance in Dubai: guidelines for buyers.
5. Excellent Claims Experience
Earlier on, we mentioned how the client claims experience was not very well with the pay-per-kilometer method.
However, with traditional insurance, your claims experience is excellent!This is because upon providing certain documents and evidence for processing your claims, your car will either be repaired or replaced.
To know more about Motor Insurance Accident Tips & Claims Process, read this article!
So there you have it!Finally, we have shown you how the so-called ‘new’ pay-per-kilometer option is not good for you.Unfortunately, the introduction of new methods is not always good for you.
These providers entice you with surface-level benefits.Hence, all of these might seem very attractive to you.
Similarly, you might be swayed by their presentation and popularity.
Through our research, we have identified the best insurance option for you.
These findings will help you make an informed decision.
Therefore, ditch the pay-per-kilometer and stick to a traditional and better car insurance option for yourself.Don’t worry, you’ll thank us later.Like always, #WeGoTYouCovered
To know more about your insurance options, read this Dubai Insurance Buyers to Benefit From Increased Options Now
Also, Read this before you buy your first Car Insurance UAEDid you think that the pay-per-kilometer was a good idea for you?
Have you or anyone you know used it?
Were you satisfied with your experience?
Do you disagree with us?Discuss with us in the comments below!
Originally published May 02, 2021 13:59:00 PM, updated Jun 03, 2022