Usage based coverage is increasing in popularity among carriers and drivers.
Large insurers such as Allstate and Progressive are taking the auto industry in a new direction with pay as you drive insurance policies that track a motorist’s average speed, mileage, and other driving details that can help those customers to experience significant discounts in their premiums if they prove to be good drivers.
Though usage based policies had a slow introduction, these efforts are now being accelerated.
Carriers are finding that the popularity and possibilities of this type of coverage are worth a strong push forward as both they and their customers enjoy the benefits of the devices that are installed into vehicles to transmit data regarding various driving and use statistics. This information is then applied to adding discounts to the premiums calculations, if the driver qualifies.
Also known as user based insurance coverage, this calculation based on data collection allows drivers to be rewarded for their safe and careful habits and for the low use of their vehicles. As of yet, programs that have been implemented are designed only to help to discount premiums and are never used to increase the rates that are paid. That said, many believe that drivers that are more reckless and that speed and use their cars more often will likely see higher premiums one day.
According to the general manager of the usage based coverage arm of Progressive Corp, Richard Hutchinson, “Consumers are going to see more of this.” His company’s pay as you drive program is known as “Snapshot”. That said the “Drive Safe and Save” program at State Farm Mutual Automobile Insurance Co. is offering similar promises: that drivers will pay less if they allow the company to monitor their habits and are found to be safe motorists.
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Companies are advertising premiums reductions of anywhere from 20 to 50 percent.
The Hartford Financial Services Group has also been offering this type of program, since the end of last year, and theirs is known as the TrueLane policy. Similarly DriveWise is available at Allstate Insurance Co., which is offering a 10 percent discount to all drivers who sign up, regardless of the data they collect regarding usage.
Insurers have been tinkering with pay as you drive insurance for several years, and it appears that the technology and the interest has finally arrived.