An innovative new type of general auto insurance has come into popularity in South Africa. This is pay as you drive motor insurance, which is a great way of insuring your motor vehicle. Pay as you drive insurance works on the basis that you only pay for the amount of time you have spent on the road. It is breaking through the market for car insurance companies.

How it works is that you pay a small base fee each month for things like theft, attempted theft, and other damages that could occur to your vehicle when you are not driving it. Then you are given a cent per kilometre rate, which determines how much you will pay at the end of each month according to how far you have driven. Therefore, if you drive less, you will pay less. This base fee and the cent per kilometre rate are all calculated off your risk profile. Your risk profile is drawn up by a range of factors; including your age, address, driving record, the car you are driving and your gender.

Pay as you drive insurance is growing in popularity compared to other car insurance companies because of its cost effectiveness for people who do not spend a lot of time on the roads. There are even great incentives whereby you will only start paying for your time on the road after a certain amount of kilometres. You are usually able to keep track of how many kilometres you have travelled, through a tool on the insurance company’s website.

The amount of kilometres that you travel each month is monitored by a tracking device that is installed in your vehicle. This tracking device also serves as a theft deterrent, and a way for the insurance company to track down and recover your vehicle should it be stolen.

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