Officially called Pay-As-You-Drive insurance, PAYD is based on the assumption that the less you drive, the less likely it is that you will have an accident. There are two major players in the field; check also with your insurer as this is a continually changing situation.

(1) The My Rate Plan. Available for cars made after 1996, this plan is offered by Progressive Insurance (www.progressive.com/myrate) in Kentucky, Michigan, Minnesota, New Jersey and Oregon, with more states expected to join.

In order to participate, you must install a device (sent to you for free by the company) in your car that tracks mileage. The company then reviews the collected information and lets you know how much of a discount you are entitled to. The discount is based on three factors: how much you drive, how aggressively you drive and when you drive.

$TIP: Take time to browse Progressive's web site. It has detailed information on other ways to cut auto insurance premiums that may apply to your particular situation.

(2) GMAC (http://www.lowmileagediscount.com/) has a similar program. It is currently available in 34 states, with more expected to join this year. It is available for those who own GM cars that come equipped with the OnStar navigation system. You can save up to 54% on premiums if you drive less than 15,000 miles annually.

For example:

Annual Mileage          Average Total Savings

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0-2,500                             54%

2,501-5,000                       39%

5,001-7,500                       34%

7,501-10,000                      26%

10,001-12,500                    18%

12,501-15,000                    13%

Note: Unlike Progressive's plan, GMAC tracks only mileage and not when you drive nor how aggressively you drive.                         

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