The modern world has thrown up a myriad of new insurance product options to consider when you are looking for a policy to cover your auto insurance. One of the newer offerings on the market is usage-based car insurance, a product offered by many of the major companies that ties your insurance premium to the amount of time you use your car and how good of a driver you are.
This is not a good insurance product option for everybody as there are many more variables in play than you would find in a regular policy. These policies use technology – usually a smartphone app along with a tag or dongle – to monitor your driving and calculate a score. This score is based not only on the amount of time you use your car – and the amount of miles you drive – but also on how safely you drive. This means it will track aspects of your driving like acceleration, phone use, speed, and breaking to algorithmically judge how good of a driver you are.
If you score well – meaning that you are classed as a low risk driver – then the savings are significant. Some studies have shown that the lowest risk drivers could be saving anything from 50% to 60% of their premium by using this insurance product option. One major issue is that this type of policy is very strict and rigid. Some companies consider low risk driving to be less than 7,500 miles in a year, ideal for those in the city that use public transport to get around, but perhaps less practical in the Midwest where driving to work – and to other cities that are spread far apart – is an established way of life.
The other issue is certain to be one based on a lack of privacy. These policies have to track you and see what you are doing in order to make them viable. If you are in a car accident there is a worry that the information that has been gathered could be used by the police to some end. Also, risky driving could actually increase your premium on the flip side of saving you money.
As a result this is very much an insurance product option where (ironically) your mileage will vary. If you think you are a safe driver and you drive minimal miles in a year then be sure to check out a usage-based policy to see if you can save some money.
Article by Vital Guidance