WEDNESDAY, MAY 6, 2015
The auto insurance industry is on the brink of a major transformation. If you haven’t heard of it yet, it’s only a matter of time till you hear about the new techniques the personal auto insurance companies are designing in order to save you a few bucks, and also benefit themselves. I myself have even participated in the tracking revolution. Obviously, it can save you money, but with people being wary of privacy issues, is a few extra bucks in your pocket worth it?
The new fad in offering savings to the consumer when it comes to their personal auto policy are the new tracking devices. Companies have slowly started following this trend within the past 5 years and it has just now started to explode. So what’s the deal? When I participated, I agreed to plug a tiny tracker into my car for a 3 month increment. They tracked how fast I accelerated, my braking patterns, if I was aggressive or not and for my participation I received a discount on my insurance. Some companies are using the tracking device to personalize your premium based off the actual usage of your car each month. In theory, everyone wins here whether it be Progressive, State Farm, or Safeco. Customers can pay a personalized premium that’s based more on how they drive and their habits and less on their age, gender, or credit background and companies attract better drivers or wreck less often. Usage based insurance, as the program is known, is generating vast amounts of data every second. Insurance companies are pledging to keep the information confidential for now, but some experts believe that we’re not too far away from companies’ contributing complete driver histories into a central database. Then, we’d all have driver scores like the numbers that FICO helps creditors calculate, which would follow us around whenever we shopped for a new auto insurance policy.
For me personally, having the device made it a game that could yield real results through safer behavior. Studies through these devices prove the majority of people learn to brake more gently within just a few weeks of using the device. For me, I ended up saving about $20.00 per month off of my premium. I had had a wreck that increased my premium so for me personally, it was worth it.
Using the new tracking devices may not be the best option for everything. It is just one more thing that insurance companies are trying to do ease insurance costs and keeping our industry innovative.
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