Usage-Based Car Insurance
If you’re like most people, you’ve probably cut back your driving habits in adjusting to the skyrocketing price of gas. Who can afford to spend $75 a week on gas? Fortunately, driving less can save you money on more than just gasoline – you can save on car insurance too. While you’ve most likely heard of insurance discounts for drivers with low annual miles, car insurance companies are developing a new type of policy that could completely change the face of car insurance as we know it. Referred to as usage based car insurance or “pay-as-you-drive,” this new program tracks your driving habits and mileage directly from your car. Your insurance company then uses the information to determine your premiums. For those that drive safe and don’t put too many miles on their vehicle, a usage-based policy has the potential to save a lot of money.
How it Works
Car insurance companies track your driving by installing a device in your vehicle, typically referred to as a “black box.” The device tracks important data, such as how you drive, when you drive, and your mileage, and then sends it back to your insurer. While conventional factors like your age, vehicle, and location are still used in determining your premiums, a usage-based policy does give you a little control in your insurance costs. Although some people see these tracking devices as an invasion of privacy, even more people seem willing to try them out in order to lower their insurance costs. With gas prices and insurance premiums spiraling out of control, you can see why drivers are looking for any discount they can get. So far, usage-based car insurance plans have only been implemented in a few states and still have some obstacles to overcome before they gain widespread acceptance.
Problems with Usage-Based Insurance
- As with any new technological advance, cost is almost always an issue. The black boxes that track your driving habits are still fairly expensive and usually require professional installation. Your insurance company may pay for most of the cost, but you’ll probably still get hit with installation fees and special charges.
- Some car insurance companies are actually fearful of implementing any type of usage-based insurance because they believe it could eventually lower insurance premiums overall. This means it could be a while before your company ever introduces a usage-based policy.
- Based on current policies, a usage-based plan is probably not everyone. By putting a lot of miles on your car, driving unsafely, or driving past midnight frequently, some people could actually see their car insurance premiums increase.
Additional Resources
Related Posts
 |