More Auto Insurers Are Now Offering Usage-Based Insurance

 

Chances are that if your auto insurer doesn’t offer usage-based insurance (UBI) also known as pay-as-you-drive (PAYD) insurance or pay-how-you-drive (PHYD) insurance, it soon will. With usage-based insurance, you allow a telematics device to be installed in your vehicle which in turn allows the insurance company to monitor your driving habits. If you are a safe driver, your good driving habits may earn you a lower insurance premium than other people who have bad driving habits. According to the National Association of Insurance Commissioners (NAIC), approximately 20 percent of all auto insurers will offer usage-based insurance within the next five years.

Once the telematics device is installed in your vehicle, it monitors your driving habits and records them. Some of the activities monitored include where and when you drive, the number of miles you drive, any periods of rapid acceleration or hard breaking. While some drivers have voiced concerns regarding privacy of personal data gathered, top companies offering usage-based insurance, such as Progressive Insurance, report that there is no interest in tracking drivers’ personal data and the data is not shared with any third parties.

How does usage-based auto insurance differ from traditional auto insurance? With a traditional auto insurance policy, your insurance premium is determined by a number of factors including past driving history, make and model of your vehicle, the mileage and how you use your vehicle (such as using the vehicle to drive long distances for work commutes or exclusively for recreational driving). What a traditional auto policy doesn’t take into account that is factored into the insurance premium by usage-based insurance is your present patterns of driving.

read more : https://www.thebalance.com/auto-usage-based-insurance-4132461