Usage-Based Car Insurance in India

The motor insurance industry is witnessing a fast progress and innovative technological development in the recent years. With multiple new concepts launched for both the insurer and the drivers, this industry is seeing new dimensions. Though very less is known about the Usage-Based car insurance, this is an innovative concept which can change the future of motor insurance industry. This concept mainly works on the basis of telematics and RF technology to understand the driving nature as well as the driving practices of the drivers and offering them insurance as per the calculation.

In this kind of car insurance, the premium rates are decided on the basis of the driving style and nature of the driver. While this new insurance technology rewards the diligent and safe drivers, it works as a motivation for the rash drivers to work toward improving their driving pattern. In this way, it is not only helpful for the safe drivers to buy car insurance policy at a low rate but also works towards imbibing safe driving practices in the rash drivers.

Usage-Based Car Insurance in Detail

In the conventional vehicle insurance, there is no accurate data related to the driving pattern of the driver. The previous driving records and other traffic events are the main factors based on which the premium is fixed. However, this advanced technology-oriented concept is completely different from the traditional method as in this method, the live data of the driver is acquired with the help of Telematics, RF technology, and GPS to determine the exact cost of insurance. Since it is based on accurate data, it is more beneficial for the driver as well as the insurer.

UBI or Usage-Based Car insurance is also known as Telematics insurance, is a newly launched car insurance scheme where the data about the driver's driving habit is fetched and based on that the premium rate is decided. This newly evolved technique is more advantageous compared to the traditional one in a sense that it assesses the actions and behaviours of the drivers in real situations and based on their habits offer the premium rate. This scheme allows the drivers to have more control over their premium costs as they get the right to decide how they want their insurance cost to be. If they inculcate safe driving habits they can get low-premium costs as rewards while on rash driving they have to pay higher premiums on their insurance policy.

Working principle of Usage-Based Car Insurance

The working principle of Usage Based Car insurance scheme is largely different from the conventional one. Driving distance, mileage, place, time, and behaviour of the driver are the main factors which are instrumental in deciding its cost. The driving history of the insured vehicle will be directly transmitted to the insurance company with the help of the telematics devices. After monitoring multiple parameters such as the distance that the car has covered, the time of usage, the road taken while driving, hard braking, hard cornering, airbag deployment, rapid acceleration, record braking history, acceleration pattern, and several others, the insurance companies determine the premium cost for every single driver. The insurance companies collect these data from the reading of the odometers and other in-vehicle telecommunication devices which are installed in the cars by default. The concept of this policy summarises to monitor the driving behaviour of the individual and based on that deciding the insurance premiums. The policy is transparent and every driver is charged in a judicious way.

Telematics devices used in Usage-Based motor insurance

  • Smartphones with mobile apps
  • 12V dongles
  • Bluetooth connections
  • Black boxes
  • GPS devices
  • On-board sensors

Steps of Usage Based Insurance

  • At first, the insurance company collects all the information about the driver from the telematics reading.
  • Next, they evaluate the data and on the basis of that fix an insurance premium charge for that particular driver.

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