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Usage Based Discounts Gaining Popularity In US

Every person has different driving habits. Car insurance companies take these habits into account when they determine car insurance premium rates. One new innovative way that car insurance companies are reaching out to drivers to get them to become policy holders are through usage based discounts.

For example, if a person only drives a few miles per day then usage based insurance could net them inexpensive premium rates. Car insurance companies make their policy holders prove their driving habits before a discount is issued.

Most companies will request that a driver installs a tracking device on their vehicle.

The device is one that will document when the person leaves, how far they travel, how hard they apply the brakes when stopping, and how fast they accelerate. All of this information will be compiled over the course of several months.

Then, a discounted insurance premium rate will be calculated for the driver.

Some drivers shy away from doing this because they feel as though their privacy is being invaded. However, taking a leap of faith can pay off financially. Drivers can get a discount of up to thirty percent. In today’s economy, this can help people save hundreds of dollars on their car insurance coverage.

It is important to just drive the way that you normally would because trying to play the system is not a good idea. It is important for the information to be as accurate as possible. Only one percent of drivers currently use usage based car insurance policies. Car insurance companies are hoping that more policy holders will try out the tracking devices because many people could benefit from them.

For example, if someone drives less than 10,000 miles per year then they might be able to get a discount if they drive responsibly and are not quick to accelerate. Many drivers think that they have to drive very few miles to qualify for a discount but each case is assessed differently based on the driving patterns that have been established.

Insurance industry insiders have stated that the number of people who will obtain usage based insurance will increase to 20 percent by 2017 and will be up to 30 percent by 2020. In a bad economy, many drivers stay at home until they can find a new job so they do not drive that many miles.

Usage based discounts have become popular.

According to a new poll, more than 80 percent of drivers said that they would use a tracking device to gain a discount from their car insurance company. This is a promising statistic for insurers because they would prefer to have their policy holders to drive fewer miles so that they are less likely to get involved in a car accident.