Gaining popularity, capsule car owner insurance plans are based, as the name suggests, on the number of miles your car drives. The more miles you drive, the higher the premium. The fewer miles you drive, the more you’ll save. In our current economic times, the idea of paying less for this unavoidable expense is quite appealing. However, the capsule has some disadvantages.
First, you need to allow your use of your car to be monitored. Tracking your mileage is not free and you pay those costs, not the insurance company. Especially if you have a GPS device installed, the monitoring costs may outweigh the savings on your premiums. Also, if you change companies, you will also have to change monitoring devices. That means you should think twice before switching companies just to get what appears to be a lower rate.
Second, the companies that make the odometer tracking devices often charge a monthly fee for transmitting the data. Therefore, drivers not only have to pay for the odometer tracking device to participate in the insurance program, but they will also have to pay additional fees. Again, this could eliminate the savings benefits gained by having capsule car insurance.
In addition, insurance companies would have to develop a completely new payment structure in order to offer this insurance to their customers. Insurance companies could easily pass any costs associated with this new payment structure directly onto drivers, again removing any financial benefit gained from pod insurance.
Concerns have also been raised about the data collected by odometer tracking devices. Supporters of the insurance model claim the devices will only track the mileage needed to calculate Pod insurance premiums, but that could easily change. The devices could be revamped to collect additional data about drivers, including if, when, and how often they drive. This data could then be passed to insurance providers, who could potentially use this information to justify rate increases for insurance premiums.
Those who are in favor of capsule insurance claim that less driving will result in fewer vehicle accidents. However, the relationship between vehicle miles traveled and accidents is not entirely proportional. Also, low mileage drivers are not necessarily better or safer. A driver in a capsule insurance program can be in an accident just as easily as a driver in a more traditional insurance program.
On the surface, the pod’s cost savings seem quite attractive. However, drivers considering pods should ask detailed questions before enrolling in the plan. Gather as much information as you can to determine if Pay As You Go is really right for you.
