Usage based insurance faces a road block in California

California Auto Insurance
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California Auto Insurance

Tracking technology has privacy advocates raising concerns regarding its intrusive nature.

Though California had initially been among the states leading the way for usage based insurance, it has suddenly hit a wall as privacy advocates speak out against what they feel is an excessive intrusion that could lead to significant consequences.

The UBI programs are meant to provide insurers with a more accurate reflection of a driver’s behaviors.

With the information they collect through usage based insurance, auto insurers have been able to offer lower risk drivers a discount on their premiums. This is accomplished by installing a small device into the vehicle, which will monitor details such as a motorist’s average speed, driving frequency, tendency to break hard, the number of turns that are made and, in some cases, even the location of the vehicle.

Progressive is currently leading the usage based insurance market and says that many of its customers are saving.

The insurer has estimated that approximately 70 percent of its usage based insurance customers are showing that they drive safely enough to qualify for a discount in their monthly premiums.

However, according to privacy advocates, money isn’t the only factor to be considered. They have stated that the cheaper coverage is not worth the tradeoff, as the use of the data could change over time so that drivers could one day be penalized for certain behaviors, such as visiting neighborhoods that are considered to be unsafe.

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This argument is being heard by the California Department of Insurance, which is currently against the expansion of usage based insurance technology for that purpose. According to an email by a spokesperson for the department, Pat McConahay, “While there are occasional discussions with certain insurers and vendors, the Department has no imminent plans to initiate usage-based rating factors.”

So far, insurers have said that they don’t have any problem with the state’s opposition to applying usage based insurance to penalize drivers with riskier habits. They have stated that this is not the purpose of the programs.

Usage based insurance in California is highly important as almost 10 percent of all of the cars in the country are found in that state. Almost 13 percent of all auto policies sold are written there. In many ways, this makes the state a leader in the industry and it plays an important role in the development of new programs, technologies, and regulations.

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