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Auto insurance: Michigan supreme court to decide on credit scoring

Auto insurance companies are beginning to offer a new pay-as-you-go option that could save consumers money on their premiums for driving fewer miles. But they may have to allow insurers to monitor their driving with special devices to get the savings.

So far, one nationwide auto insurance company is offering the pay-as-you-go option, while another company is offering it in Texas. At least two other insurers are rolling out the plans in the coming months, according to AOL Auto.

"You'll in effect trade a degree of privacy for a lower rate," said Mike Barry, vice president of media relations for the Insurance Information Institute, AOL Auto reported. "They know not only how many miles you drive but how and when you drive."

A device placed on the car by the insurance company can detect how many miles the operator drives, as well as certain types of driving behavior such as sudden starts and stops.

Drivers with the device could face penalties on their rates for bad driving behavior or driving during higher-risk times, in states where a surcharge is permitted, according to the report.

A Dallas-based company announced recently that it had become the first in the country specifically licensed to sell per-mile auto insurance.

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