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Usage Based Auto Insurance

Usage based auto insurance has arrived. Getting a discount on your auto insurance based on your specific driving habits is now possible. Insurance companies are now able to track your driving habits and base your auto insurance savings on how good of a driver you are. There are devices available that plug into one’s car to track the driving habits of the driver electronically. It is simply a device that plugs into one’s car’s onboard diagnostic port. The onboard diagnostic port is located under the steering column in most cars. It can be simply plugged into the port and through wireless technology one’s driving habits can be tracked and monitored to help the insurance company to determine a savings based on one’s specific driving habits. The driver can usually also view their own driving information through the insurance company’s website.

Usage based auto insurance is growing. Progressive Insurance was the first insurance company to widely offer its usage based auto insurance device and has been doing so for a while now with great success. Progressive offers a “pay as you drive” program called Snapshot. It gives you a personalised rate based on your driving. The better you drive, the more you can save. It is available in most states except AK, CA, HI, IN and NC. Snapshot collects driving data like how many miles you drive, the time of day you drive and how often you make sudden stops will be collected. You can review your driving snapshot anytime by logging in to your policy on ProgressiveAgent.com

Progressive will apply any discount you earn about 30 days after you plug in your Snapshot device. Then, when you renew your policy, Progressive will set your personalised Snapshot discount. You then keep your discount for as long as you are insured with Progressive. If you make a significant change to your policy, Progressive may ask you to take a new snapshot of your driving.

Sprint has launched a connected car offering for automotive insurance companies. The IMS UBI intelligence tool offers insurers a way to accurately determine a driver’s policy premium based on their driving behaviour. Drivers can choose to plug a telematics device into the port of their vehicle, which will measure metrics such as distance travelled and their braking and acceleration patterns. As a result, they may benefit from a lower premium for proving that they are a good driver. Insurers could also use the service to levy a higher premium on drivers who are not. The operator teamed up with connected car solutions provider Intelligent Mechatronic Systems (IMS) to devise the solution.

State Farm and Ford have recently announced that they are jumping in on the usage based auto insurance market as well. With all of these companies going in the direction of offering usage based auto insurance, it is important drivers determine if it is the best option for them.

Metromile is a California-based insurance startup funded by New Enterprise Associates, Index Ventures, National General Insurance/Amtrust Financial, and other investors. It offers a pay-per-mile insurance product using a device that connects to the OBD-11 port of all automobiles built after 1996. Metromile does not use behavioral statistics like type of driving or time of day to price their insurance. They offer consumers a low base rate per month and a per-mile rate ranging from 2 to 11 cents per mile, taking into account all traditional risk factors. Drivers who drive less than the average (10, 000 miles) per year will tend to save.

So, who would be best served by a usage based auto insurance device? Of course, anyone who is a great driver already and wants to make sure they are getting a good deal on their insurance for doing so. But, there are other applications where usage based auto insurance devices would be helpful. The first thing that comes to mind for parents out there would be how great of a device this would be to use to monitor their teen driver. We all know it is well documented that teen drivers have some of the highest accident rates. The usage based auto insurance device is probably one of the best tools a parent could have to keep track of how their teen is driving.

Along with tracking the driving habits of one’s teen, the usage based auto insurance device will also be able to track the actual time of day that the vehicle is being driven. Also, the parent can be alerted if the device is removed. It is easy to see why a usage based auto device would be helpful for a parent of a teen along with someone who knows they are a good driver and wants to pay less for their insurance based on their driving habits. A usage based auto insurance device can also be a good tool for the elderly to use so they can monitor their own driving habits in order to assist them in noticing any changes in their driving habits which could help them determine if a health problem is arising that could be impairing their driving.

In addition, it could be a great tool for someone who acknowledges that they do not have the best driving habits, knowing their insurance company is tracking their habits as if their agent was in the car with them, could be a great tool for changing one’s negative driving habits into positive ones.