Technology has led to many changes across many industries, including the insurance industry. Recently, many insurance providers began offering usage-based auto insurance programs powered by technology to remain competitive and offer their customers rates based on actual data about their driving patterns. The National Association of Insurance Commissioners describes usage-based insurance as “a recent innovation by auto insurers that more closely aligns driving behaviors with premium rates for auto insurance.” However, can usage-based car insurance really save you money? The real answer to the question still depends on the factors used to rate your car insurance.
New Usage-Based Auto Insurance Programs Give Incentive to Drive Less
One of the many factors insurers consider when rating your auto policy is how often you drive. If you drive more often, then you may increase the chances that you will be in an auto accident. From the number of miles you drive to and from work to the distance you drive for vacation, every mile you drive can affect your car insurance rate. Exposure to more drivers and drowsiness (from driving too much continuously) may increase your risks on the road, which may make driving your car frequently risky business for insurers.
Instead of assigning a risk factor based on the mileage you estimate you drive during your insurance application, drivers who have usage-based car insurance will see that they pay for auto insurance based on their actual mileage. For drivers who drive less, usage-based auto insurance could reduce the price of their auto insurance.
Detailed Information About Your Car’s Performance Can Help Reduce Insurance Costs
Another bit of information usage-based insurance programs offer insurers is information about your car’s performance. It’s no secret that there are cars that are safer on the road than others. As a result of this, these cars are rated better for drivers, which helps consumers like yourself lower the cost of your car insurance.
Unfortunately, general performance reviews about cars don’t give insurers a lot of insight about your specific car. For instance, a wrecked car that is repaired and placed back on the road may not perform as well as cars that are comparable—the same make, model, and year—that haven’t been wrecked. With data from usage-based insurance programs, your insurer can determine whether or not your vehicle’s performance may be a risk to you and other drivers on the road by monitoring your car’s performance. If your vehicle is performing optimally, you could save money on your insurance.
Telematics Reduce Insurance Fraud
Telematics is the technology used in usage-based auto insurance programs. Insurers can use the technology using a portable device or they can use the Bluetooth technology in your car. One of the biggest advantages to your insurance company is the data the device sends. In particular, the device can report information to your insurance company regarding a recent collision. Armed with information about wrecks, your insurance provider can make a reliable estimate of your repairs.
Most importantly, this information can streamline the rising cost of insurance fraud, which the Coalition Against Insurance Fraud estimates automobile claim fraud “excess payments represented 13-17 percent of total payments under the five main private-passenger auto injury coverages.” With more data, your insurance provider can prevent these payments and reduce the cost of your premium payments.
Usage-based auto insurance programs hold real promise for drivers and insurers. If you are reviewing your auto insurance policy, you should inquire about usage-based insurance programs offered by your local insurer.
Find out if you could be saving money. Call Insurance Providers at (417) 862-7700 for more information on Springfield automobile insurance providers.