It pays to be a good driver. Usage-based insurance (UBI) companies are seeking to change the way auto drivers are insured in an effort to lower prices for good drivers. Usage-based auto insurance utilizes real-time information, gathered on the driver’s smartphone, to assess risk.
The statistics on insurance are jarring, to say the least. A recent study by analytics company ValChoice determined that consumers overpaid for auto insurance to the tune of $100 billion over the last five years (link: http://www.fa-mag.com/news/americans-overpay-more-than–100-billion-for-car-insurance-30132.html). In addition to Undoubtedly, this has sent consumers on a mission to secure more efficient and fair pricing, especially when they consider themselves good, safe drivers.
The receive an individualized insurance policy, consumers must accept the trade-off: their privacy. With every aspect of their driving under watch, consumers must agree to constant monitoring during the assessment period, with their driving skills evaluated by an algorithm.
Still, despite the trade-off, consumers are flocking to more personalized, fairer insurance rates. And who could blame them? Prior to usage-based insurance companies, insurers used demographics such as age, marital status and gender, to determine pricing. Often, good, safe drivers would get stuck with higher rates because of the risk assessment of their entire demographic, rather than their personal driving habits.
Now, with very specific driving data available from something as simple as a smartphone, consumers, and the insurance industry overall, can substantially benefit from lower, fairer rates. At a time when consumers are victimized by inflated prices, unethical billing practices and minimal personal attention in almost every industry, this is a very welcome trend.