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What is usage based auto insurance?

Do you want your auto insurance rate to be based on your usage and personal driving habits?

Drivers can save on car insurance from policies that are tailored to their personal driving habits.  Usage based auto insurance uses telematics to determine how much money can be saved.

Telematics is not new to auto insurance.  Insurance carriers have been offering it for years, but recently it has gotten very popular with consumers.

For many consumers, usage-based insurance, also known as UBI, is desired.  UBI policies collect information about the person’s driving habits and provide coverage based on how safe they drive.   With more and more consumers working from home, at least a day or two a week, Usage based insurance takes in account how you drive as well as how long you drive.

Each carrier is different in their approach to usage-based insurance.  Many companies are offering a discount of 5-10% for just installing the device or downloading the application on your phone.  Many companies will compile the data over a 90-day window or they will require that you continue to use the app or the device for the life of the policy.   Depending on your driving habits you can earn a discount up to 40% of the premium.  Some carriers are even offering a pay per mile insurance program that helps those lower mileage drivers save on average 25% over the traditional policy.

Is the telematics discount available to you so you can get an usage based auto insurance discount?

Not all carriers are offer the usage-based insurance coverage.   For the ones that do, each company offers different discounts.   Some carriers require that all drivers and all vehicles participate while others will allow you to do the program for one car or one driver.  Most carriers will not charge you more if you do not qualify for discount, you just would not get an additional credit.

Using the app is much easier than having to worry about a device to then return if you cancel your policy or sell the vehicle.   With the app it can tell if you got in the car on the driver or the passenger side to determine if you are the driver or the passenger for the trip.

Most insurance carriers look at the following factors to determine the insurance discount:

  • Accelerations
  • Braking
  • Mileage
  • Time of day driven
  • Distracted driving (by analyzing how many times you touch your phone while driving).  Having an app running on your phone such as Waze, or Spotify will not count as distracted driving.

Insurance companies are looking for new ways to make sure that each customer is paying for their own risk, rather than being classified in a large group.

This will allow each customer and each driver to have their own rate.  For some consumers, traditional insurance will remain the right option.  But for a lot of drivers, this maybe an opportunity to save.

If you are interested in learning more about telematics, then please reach out to the team at Huff Insurance.  We would be happy to go over your specific insurance carrier and how their program works.   Remember, not all telematics programs are the same.

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