01 Feb Pay as You Go and Pay as You Drive: Two Insurance Initiatives
Insurance terminology can be confusing to a person who rarely reads insurance documents, so it’s refreshing to see a couple of new insurance products that have titles that are both catchy and easily understood. We’re talking about pay as you go workers compensation insurance, and pay as you drive car insurance.
An employer who pays traditional workers’ compensation insurance has to estimate the annual payroll of the business, and pay several months of premiums in advance to cover future workers’ compensation obligations. An employer who qualifies for a pay as you go workers’ compensation plan pays premiums for the coverage each payroll period, with no requirement to forecast payroll, make advance payments, or undergo audits. The pay as you go arrangement improves business cash flow and is popular with employers.
Pay as you drive insurance is a car insurance product designed to encourage sustainable driving. Insurers who offer pay as you drive plans reward drivers who drive their cars less, and the product is said to encourage drivers to change their driving habits and rethink the sorts of trips they make.
Pay as you go workers compensation insurance is designed as an insurance product that is more easily managed by employers, while pay as you drive insurance is a usage-based product designed to reduce the cost for those who drive less and help reduce greenhouse gas emissions by reducing car usage. The two products have little in common except their names!