Having a car accident is a difficult experience for anyone, no matter how it turns out. We would all love to make a deal that guaranteed we would never get into an accident. However, the best we can do is car insurance, so that we are not left in financial straits due to a collision.
Insurance is important for everyone who drives, but only third-party insurance is legally required. Nonetheless, if you have a car accident and you don’t have auto insurance you will certainly regret it. The best case scenario is that it was someone else’s fault, and their insurance will have to pay.
If you have been in a collision that wasn’t your fault, you may have been surprised by an increase in your premium when it is renewed. After all, if you were not the cause of the accident, and your insurance did not have to pay, why should you be penalized?
This is a question that has been asked by many dismayed drivers, and it turns out there is a simple, if unsatisfying answer.
Why do insurers penalize you for other people’s mistakes?
When considering the topic of insurance, you need to keep in mind that it is an impersonal concept. The idea of being penalized for making claims is inaccurate, because all that is happening is that your risk level is being reassessed. People who make claims are more likely to make claims in future, especially if they are at fault.
In the case of not-at-fault accidents, the same applies, if to a lesser degree. Statistically, people who are in collisions are more likely to be in collisions. This doesn’t necessarily have anything to do with you or your driving. On the contrary, your accident could be a complete fluke. But the reality is that it is an indicator of higher risk.
Why are people who are in collisions at higher risk? It could be because of the roads they drive on, the traffic they drive in, or the frequency with which they drive. Sometimes, it has to do with their own driving – as would be the case when someone rear ends you when you stop a bit too abruptly, but not abruptly enough for it to be your fault.
Thus, if you look at yourself on an individual level, you may be at no higher risk of collision than someone who has not been in a collision. However, insurance companies are not looking at you on an individual level. They view their clients in the form of numbers, and make decisions accordingly.
Can I avoid this?
With many insurance companies, there is no way to avoid your premium being calculated in these terms. They use rigid models that minimize risk for themselves. However, there are now insurance companies who do take a more personalized approach.
These companies look directly at your driving behavior to determine your level of risk. They do this by installing a tracker in your car that detects how you drive. If you make a lot of sudden stops, you are considered higher risk. If you always drive at the speed limit and make smooth stops and turns, you are at lower risk. The less frequently you drive, the lower your risk level.
This type of insurance gives you the ability to improve your premium by driving better. It gamifies the process, giving you incentive to drive more safely. It both benefits you and the insurer. Instead of relying on statistics to get a general picture of your risk, it sees you as an individual, with the understanding that people can change.
The downside to this type of insurance, of course, is that you have to give up a level of privacy in order to benefit. Your car will carry a tracker at all times that detects where you are, when you leave the house, when you return, where you go, and more. But this data goes directly into the system rather than passing through the hands of employees. Also, if you are carrying around a smart device, your location is tracked by a third-party company anyway.
Your car insurance premium is affected by a not-at-fault collision because of statistics. The best way to beat this system is by providing your own data, taking advantage of the opportunities offered by insurers to control your own level of risk.