Usage-Based Auto Insurance - Rekerdres and Associates

usage based auto insHome-bodies and shut-ins – rejoice!   Road trippers and traveling salesmen – beware! 

Insurance industry analysts predict that usage-based auto insurance will dramatically increase over the next seven years. That means people who drive more will pay more for insurance…and people who drive less will pay less. This technology debuted about 10 years ago, and auto insurers like Progressive have been utilizing this system (we all know the ‘Snapshot’ TV ads).

The Insurance Journal wrote an article summarizing this shift. They say that one of the reasons usage-based rating methods are growing is because these devices, inserted into the car, appear to change the behavior of drivers. ‘More than half of the participants in a public opinion survey said they have made changes in how they drive since installing the telematics device in their primary vehicle’.

In addition to well-behaved drivers, insurers also love the wealth of information provided. Not just measuring miles driven, a telematics system monitors driving habits related to braking, steering, and acceleration. Insurance companies can use these figures to raise/lower your rate, as well as assess regional driving habits (city vs rural, coastal vs mountain, etc.)

It’s easy to cringe at this industry ‘shift’, but I’m fairly optimistic. Over time these devices will clear up many underwriting uncertainties, likely leading to lower rates across the board. Get excited!

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