More auto-insurers now offer usage-based insurance

The common trend among auto-insurers today is offering usage-based insurance. This involves installing a telematics device in your vehicle for the insurance company to keep track of your driving habits. You can get low insurance premiums if the device demonstrates that you are a responsible driver. Statics reveal that almost every auto-insurer will be offering usage-based insurance in less than five years.

The telematics device can monitor and record your driving habits. It monitors your current activities while on the road, such as the number of miles you cover, when you drive and the specific locations. It can also record any periods of over-speeding or hard braking. This record is useful to the insurance company since they can tell what kind of a driver you are.

Some of the drivers have, however, raised issues regarding the device gathering personal data and auto-insurers infringing their privacy.  The companies that use this device report that they have no interest in tracking your personal data. They also cannot share it with any third party. This means that you can use usage-based insurance without worrying about a breach of your privacy.

How usage-based auto insurance differs from traditional auto insurance

When you are on a conventional auto insurance policy, the factors that determine how much insurance premium you should pay include your past driving history and the car’s make. If you use your vehicle for long commutes and cover extended mileage, you should expect to pay high premiums. A traditional auto insurance policy does not, however, take into account your present driving patterns. This is what differentiates it from a usage-based insurance policy. Though you may have caused an accident in the past, a change in your driving habits will not make you pay low premiums when you continue using a traditional auto insurance policy.

Since a usage-based insurance policy keeps track of your present driving patterns, it takes into account any changes in your driving habits. It, therefore, gives you a second chance of becoming a responsible driver. Adopting safe driving practices earns you an incentive. It also benefits the insurance company since it reduces the number of road accidents, thus minimizing the number of claims that the company should pay out.

If you have been classified as a high-risk driver, you can reduce your premiums by driving safely and getting usage-based insurance. Though most of the auto-insurers are now offering this program, it is not mandatory for drivers. If you don’t need your data to be sent to an insurance company, you don’t have to be part of the program. Your insurer should be able to give you all the details you need regarding how the telematics device collects data before encouraging you to join the program. The insurer you work with should also have a disclaimer on its website that has more details regarding its privacy policy. Being part of this program can also help drivers enjoy other benefits such as vehicle theft tracking and vehicle wellness reports. You need to research before you decide the best usage-based insurance program for you.