Pay as you go coverage is an auto insurance policy that charges a premium based on the miles driven by the policyholder.
It is also applicable to workers' compensation, where it allows employees to make a much lower initial payment.
It is also known as usage-based insurance.
Pay as you go coverage for auto insurance charges the insured based on their mileage, meaning that their insurance premium will climb the more they drive. Insurance companies monitor the distance the insured drives through a telematic device installed in their vehicle.
As for pay as you go workers' compensation, it involves charging a lower initial premium compared to the standard plan, which asks for 25% of the employee's annual income. The rest of the payments are spread throughout the working year.
This payment structure provides the employee with cash savings; however, not all states currently provide it.
Synonyms
Usage-Based Insurance
Share this Term
Stay informed with Insuranceopedia!
The world of insurance can be complicated. Subscribe to the Insuranceopedia newsletter and stay in the know! Access expert content, industry term definitions and answers to your questions from knowledgeable insurance insiders. Arm yourself with what you need to know to keep your assets and your family safe.
Latest Articles
