Pay-as-you-drive (PAYD) insurance is an exciting innovation. We develop a dynamic model to study PAYD insurance from the policyholder’s utility maximization perspective. We demonstrate that PAYD insurance does benefit the policyholder by reducing premium paid and increasing the total utility derived from auto usage and wealth. PAYD insurance may also improve overall social welfare by incentivizing customers to drive less. We illustrate that PAYD insurance is more efficient than fuel tax in reducing mileage due to the concavity relation of premium and driving distance. Finally, we derive a cut-off value of mileage below which policyholders who drive with traditional insurance should switch to a PAYD policy. Our research proposes a reliable theoretical framework, and confirms that PAYD insurance benefits both individual customers and society as a whole.

按驾驶付费 (PAYD) 保险是一项令人兴奋的创新。我们开发了一个动态模型，从投保人效用最大化的角度研究 PAYD 保险。我们证明，PAYD 保险确实通过减少支付的保费并增加汽车使用和财富带来的总效用而使投保人受益。PAYD 保险还可以通过激励客户减少开车来改善整体社会福利。我们证明，由于保费和行驶距离的凹性关系，PAYD 保险在减少里程方面比燃油税更有效。最后，我们得出一个里程临界值，低于该临界值，使用传统保险驾驶的保单持有人应转而使用 PAYD 保单。我们的研究提出了一个可靠的理论框架，