The auto insurance industry as a whole has developed rapidly in the last few years. Many of these improvements are due to innovative technological advances in recent years. With so many new ideas for insurers and drivers, the industry is looking for new angles and opportunities to improve overall. Little is known about usage-based auto insurance, but it is a unique concept that could change the future of the auto insurance industry. The concept works on telematics and RFID technology to understand the nature of driving, learn how drivers drive, and offer calculated insurance.
In this type of car insurance, the premium rate is determined based on the driving style and personality of the driver. This new insurance technology not only rewards careful and safe drivers but also serves as an incentive for reckless drivers to work on improving their driving patterns. As such, it not only helps safer drivers to purchase car insurance at a lower cost but also helps drivers who drive in haste to adopt safer driving practices.
Usage-based car insurance
Traditional car insurance does not take into account detailed information about drivers’ driving patterns and habits. When shopping for motor insurance online, the main factors that determine your premium are your previous driving record and the number of car accidents you have been involved in. But usage-based motor insurance is a high-tech way of thinking that is different from the traditional way of doing things. In this method, driver data is collected through telematics, RF technology, and GPS. Insurance companies determine the exact price of car insurance coverage based on the collected data and its analysis. Premiums based on accurate data are a win-win for drivers and insurers.
This plan gives drivers more control over their premium prices when deciding how much to pay. Developing safe driving habits may result in lower premiums as a reward, but careless driving can lead to expensive car insurance coverage. * Standard T&C Apply
How usage-based car insurance works
Usage-based car insurance plans work differently than traditional plans. While conventional car insurance determines premiums based on the driver’s previous driving history, usage-based car insurance takes into account factors such as mileage, distance travelled, location, time, and driver behaviour. The data collected from the insured vehicle is transmitted directly to the insurance company with the help of telematics equipment. Insurance companies determine premiums after monitoring several parameters, such as distance travelled by the vehicle, hours of use, the road being driven on, hard braking, sharp cornering, airbag deployment, and acceleration pattern.
Insurance companies collect this data from odometer readings and other onboard communication devices that are installed in cars by default. The concept of this insurance type is to monitor people’s driving behaviour and determine their insurance premium. Following this process ensures that the policy process is transparent and that all drivers are billed fairly. If you, too, want to get an estimate of the premium you may have to pay, you can use a motor insurance calculator and compare prices. * Standard T&C Apply
Telematics equipment used in usage-based motor insurance
The devices used for the collection of data for usage-based insurance include:
- Smartphone with car insurance app
- 12V dongle
- Bluetooth connection
- Black box
- GPS device
- On-board sensor
* Standard T&C Apply
Types of usage-based automobile insurance policies
There are four main types of car insurance, depending on the type of driving the driver does. Types of UBI are:
In this particular type of UBI, the insurance offered to the driver is entirely dependent on the actual distance travelled by the vehicle. In pay-as-you-drive insurance, data is collected from vehicle odometer readings. *
This type of UBI plan determines coverage based on mileage from GPS data or the total time a car takes to travel a certain distance. Total minutes are calculated using a vehicle-independent module that transmits data via RF or cellular technology. *
This type of UBI takes into account several data such as time of day, driving activity, time spent covering distance, and historical road risk factors to provide insurance. *
* Standard T&C Apply
Car insurance pricing has been the main factor in deciding whether to buy comprehensive car insurance or not. Almost all buyers feel that the price they are getting for their coverage is too high. As a result, many people do not have car insurance and risk driving without insurance. Accurately set premiums through usage-based insurance can help ensure to a certain extent that drivers are charged the right premium for coverage.
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