What You Need To Know About Usage-Based Insurance
The latest buzzword in auto insurance is usage-based insurance. You may also have heard it referred to as telematics, pay-as-you-drive, or pay-how-you-drive. Most of the major insurance companies have developed a version of this type of insurance, each with its own name to further complicate things. To make an informed decision as to whether or not a usage-based insurance option is right for you, get to know what it is and how it works.
What Is Usage-Based Insurance?
Although it sounds like it's an entirely different type of policy, it's really an option that you can add on to your existing policy. A small device is provided, which is plugged into the vehicle and records information about your driving habits. That information includes how often and how car you drive, your speed, your braking habits, and what time of day you drive. It's then sent back to the insurance company which calculates a possible discount on your policy based on the information.
Can Usage-Based Insurance Cost You?
Usage-based insurance is generally advertised as a voluntary option that can reward good drivers for their habits. Prove your good driving habits to the insurance company, and you will get a discount. Most insurance companies promise that their usage-based insurance program can't cause your rates to go up—but beware. There's a new shift that may well become a trend to actually use the information to penalize as well.
Since usage-based programs are optional and entirely voluntary, anyone who has concerns that their rates might go up can simply choose not to use the system.
How Much Can It Save You?
Usage-based programs vary from company to company, and the amount of the discount depends a lot on what sort of driving habits the company is looking for. Low-mileage discounts are one of the most common results of a telamatics device—if you're driving a lot less than the average person, odds are good you can earn a discount by using the device to prove it. Some also offer a discount for safe driving—things like staying under the speed limit and no hard braking or sharp turning habits. The bottom line is that you won't really know what kind of savings you can see until you actually try it.
Since usage-based insurance is optional, and most companies won't penalize you for the results, it's likely worth giving it a shot for most drivers. Just be certain you get all the particular details of your company's program before you sign on. For more information, contact companies like Winder Insurance Center.