Pay-as-you-drive (PAYD) auto insurance, also known as usage based insurance, charges drivers based on how much they use their vehicle rather than a fixed monthly rate. PAYD encourages people to use their vehicles less by rewarding drivers who drive less. The less you drive, the less you pay, and vice versa. The insurance rate is based on mileage, though some companies consider other factors such as the time, day driven, and hard braking.