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About Low-Mileage Discount
Several insurance companies now offer pay-as-you-drive programs to encourage drivers to reduce their mileage. One of the first companies to start offering PAYD insurance in the U.S. was National General, better known originally as GMAC. Progressive and National General were the first companies to pilot this type of insurance in the US.
National General has essentially teamed up with OnStar to provide a pay-as-you-go insurance solution. National General’s mileage-based insurance uses an existing OnStar system to track a driver’s distance. If you already have OnStar and are insured with National General, you’re automatically eligible for the program.
Based on OnStar’s vehicle diagnostics, that is transferred automatically to National General, your mileage is evaluated and appropriate discounts are then applied based on a tier system.
How it Works
To participate in the National General OnStar plan, you will need an OnStar subscription and a vehicle capable of using it. Newer model vehicles manufactured by General Motors, Cadillac, Buick and Chevrolet are OnStar compatible and generally come with the necessary hardware already installed; older vehicles and cars from other manufacturers would need the program installed for a fee.
Once OnStar is activated, you do not need to do anything else to qualify for the National General discount. You just have to let them know that you’re an OnStar customer. OnStar will then forward all relevant data over to National General, who will calculate your rates accordingly.
Some insurance companies gather a lot of driving information for their PAYD policies, like braking and acceleration habits. National General collects only mileage, making it a more attractive option for those looking for a bit more freedom in how they drive. They state on their website that no other information is gathered or shared.
The National General OnStar discount is currently available in 35 states, and the company plans to expand into more soon. At present, National General reports around 30,000 subscribers participating in the program.
If you have a vehicle capable of OnStar and have, or are willing to purchase, an OnStar subscription, and have a current policy through National General, you are likely eligible for the Low-Mileage Program.
National General will monitor your mileage and offer a discount accordingly. The company rates their discount using a tiered system.
The lower your mileage, the less you pay for insurance. National General widely advertises that you can save “Up to 54%,” but this savings is only available to people with very low annual mileage – below 2,500 annually. Most drivers would likely save in the 10-20% range for annual mileage between 10,000 and 15,000.
The good news is that you won’t be penalized for mileage over 15,000, and you will still receive a discount just for carrying OnStar service.
Compared to other companies, this can still be a significant savings. However, bear in mind that you also have to take the OnStar subscription fee into account. That can cost around $200 per year on its own for the most basic plan, negating the benefit of the discount.
The greatest strength of this PAYD plan is also its greatest weakness: It requires an OnStar subscription. OnStar comes with a number of benefits, like GPS, remote diagnostics, and stolen car recovery. If you already have an OnStar account or are interested in getting one, the GMAC discount may offset the cost of your subscription or even save you money.
On the other hand, if the perks of OnStar do not appeal to you, this program isn’t really worth pursuing. Other insurers will offer the same benefits without the cost and hassle of an additional subscription service.
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