Usage based insurance grows in popularity with car insurers

usage based insurance auto

Usage based auto insurance

Telematics are increasingly used to help drivers to slash their premiums.

Telematics – a form of device that is installed into a vehicle to monitor the way it is drive – are already being used by a few insurers as a part of usage based insurance efforts to help to keep rates down, and are expected to become much more popular, quite quickly.

Studies and consumers are reporting that rates can fall by 20 percent or more with this technology.

Moreover – and perhaps just as positive as the reduced rates – motorists who have the devices installed in their cars are changing their behaviors I order to help to keep their premiums to a minimum. It has been suggested that this might even help to improve overall driver safety on the roads.

More than a dozen major auto insurance companies – including Progressive, Allstate, State Farm, Travelers, Nationwide, and American Family – are all either testing or offering this feature already. It is anticipating that this will begin taking off among carriers across the United States as they compete to attract the drivers with the lowest risk and encourage them to reduce their bad driving behaviors.

Equally, those with unsafe driving habits or who don’t want the device in their vehicles will likely soon see premiums hikes.

Telematics work through the small device hooked up to the vehicle (generally by way of the onboard diagnostics system, located at a port under the steering column. It collects various forms of information about how the vehicle is being used and driven. What information is collected depends on the insurer.

These usage based insurance programs usually monitor various factors such as how many miles the car is driven, the time of day that it is most frequently taken out on the road, the speed at which it is driven, and how frequently there is hard braking, sharp starting, and hard turning, as well as the number of right-hand or left-hand turns.

The data from the telematics device is then transmitted to the insurance company, which can use it to determine the actual risk associated with the use of the vehicle.

 

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