For a long time, whether you were considered a high-risk driver or not had little to do with your actual driving. That's because insurance companies didn't really have a way to tell how good of a driver you were; instead, they relied on general statistics like your age, the type of vehicle you drove, and even your marital status. Your own driving only came into it if you were in an accident and your premiums went up.
But today, through usage-based insurance, it's possible for companies to get a much more personalized view of your driving – if you're willing to let them.
What Is Usage-Based Insurance?
UBI means allowing your insurance company access to information about how you drive. The amount of information and how it's gathered can vary from plan to plan. The most basic type simply uses the mileage that you drive to see how often you're on the road. If you drive a lot, you're more likely to get into an accident; if you work at home and only rarely drive any distance, you're much lower-risk.
The second type of UBI is location-based. It uses GPS to see where you're spending most of your time driving; do you commute on a high-traffic freeway every day? Do you mostly drive through your suburban neighborhood? Are any of the roads you drive on particularly dangerous?
The third type of UBI is driving based – that is, it monitors how you actually drive. With a special box installed in your car, the insurance company can record your speed, your braking patterns, and even whether you're frequently jerking on the wheel to avoid accidents.
Who Benefits Most?
For a mileage program, there's a very clear answer: people who don't drive very much. For location-based programs, it's more difficult to know. You don't have easy access to statistics about how dangerous the roads around you are, but in general, rural driving in low-traffic areas is safer and might lower your rates.
The most complicated answer is for programs that track how you drive. If you're a safe driver, these programs have the potential to save you the most money on your premiums. But it's important to note that your definition of a "safe driver" might not be the same as the insurance company's.
Who Is The Ideal Safe Driver?
At heart, the answer is simple: a driver who doesn't get into accidents. In traditional auto insurance, it didn't really matter how you avoided accidents as long as you did so; an accident could mean a costly increase in your premiums. If you sped to work every day, swerving skillfully around other cars, the insurance company would never know.
UBI that tracks how you drive has a different definition, however. For these programs, a safe driver is one who drives more slowly, brakes more gradually, and doesn't need to react suddenly to avoid accidents. If this is how you drive – or how you'd be willing to drive – it's worth looking into driving-based UBI to lower your premiums. Contact a local provider, such as Colling Insurance Services, Inc, for further assistance.