Usage-Based Auto Insurance Rides The Highway Of The Future
If you’d like to save as much as 30% on your auto insurance – and who wouldn’t? – a new program called usage-based insurance might just be your ticket to lowering your premiums.
Usage-based insurance (UBI) allows insurers to track how much customers drive via a small tracking device and adjust the insurance premium based on the information they receive. Allstate, Progressive and State Farm are among the U.S. insurance companies that have already instituted UBI programs, and the response from their customers has been overwhelmingly positive. Insurers in Europe and other countries are also joining the trend toward usage-based car insurance using onboard diagnostic devices.
Backing up the trend, a company called Strategy Meets Action recently released a statement predicting the rapid growth of UBI products. They project that half of all auto insurance policies will be usage-based by the year 2020, with one-fifth of all insurers offering usage-based products.
For people who use their vehicles infrequently, or whose vehicles spend days or even weeks at a time parked at airports the UBI trend can offer significant savings over time.
The tracking devices are connected to the vehicle via the onboard diagnostics system located at a port under the steering column. In addition to mileage data, they are also able to collect information about driving style, which can also be used to assess risk and instruct insurers as to how to structure customer premiums.
Progressive Insurance is one of the companies at the forefront of the UBI trend, having already installed more than a million telegenics devices in vehicles to calculate driver usage. A number of other companies have begun promoting their UBI programs to give discounts to drivers who spend less time behind the wheel. Ten large auto insurers have usage based premium programs, but they’re not widely promoted and are available in just a few states.
In addition to encouraging people to drive less, usage-based insurance will have the side-effect of lowering carbon emissions. That’s a win-win for drivers and for the environment.