Usage Based Car Insurance

Watch this video for a quick introduction to “usage based car insurance”. Or, read the transcript below.

Usage Based Car Insurance

Usage based car insurance becomes more popular each year. Underwriting can now include real world driving results. While traditional underwriting remains the main source of information these programs continue to grow nationally. Day to day driving tracked by an insurer yield discounts for the policy holder. Discounts can go as high as 30%. Each insurance company files their program details with a state authority. Consequently all usage based car insurance programs can be different.

Insurance Trial Period

Usage based car insurance starts with a trial period. While traditional methods offer snapshots only, trial  periods vary from 90 days to 6 months. Trial periods usually include up front discounts as an incentive to participate. Discounts are removed if participation ends during the trial period. The trial period occurs one time. A device, owned by your insurance company, can inserted into a port in your vehicle. Installation instructions come with the device. The device tracks driving behavior during this period. Factors for determining driving behavior can vary by insurer. Therefore you should know how the program works.

Examples of data gathered include vehicle speed, time of day, types of roads driven, sudden acceleration and hard braking to name a few. Because criteria can vary be sure to match your driving habits with the right insurance company. For example, if time of day impacts results, working at night may be problematic. Online portals often come with the program.  A driver can track results and modify behavior when needed. Some devices alert the driver of hazardous activities by making a noise. Drivers with these devices can adjust behavior while driving.

When the trial period expires the policy holder sends the device back to the insurer. The insurance company then analyses the data and applies the premium factors that have been filed with the insurance department.

Usage Based Car Insurance is Optional

Most of all keep in mind that usage based car insurance remain optional. Evaluate your own circumstances against a program to see if it makes sense for you. The program can be used for all vehicles or you can designate which vehicles are in the program. Some companies only apply discounts for good driving behavior. Some apply a surcharge for poor driving habits. Understand the details of a program before making your decision.

In conclusion, usage based car insurance will continue to gain momentum. Insurers are looking for ways to use technology to better predict losses and give consumers options that are more personal.

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Usage Based Insurance – Video Transcript

Hi everyone, Tom Wallace, Personal Coverage, talking to you about usage based insurance programs. Drivers would like more control over their insurance rates and, of course, insureds would like those rates to accurately predict any losses.

So, these usage based programs have been gaining in popularity across the country where these small devices are inserted in your car and your driving habits are tracked electronically. And these are some of the habits that are tracked:

• speed
• braking
• time of day
• distance traveled

And, based on the program, they often give some pretty substantial discounts off your existing auto insurance rates.

There’s a trial period that is 90 days to 6 months, varies by program.

You always want to check out the details, whether it’s new clients, renewal clients.

Devices are free, but they do need to be sent back. They fit in most vehicles. And you also want to know whether a program surcharges for poor driving behavior.

In our office we have three programs available to us from:

• Safeco
• New York Central Mutual
• Progressive

If you have any questions, please, give us a call.