For some drivers and insuring some models of automobiles can be very expensive. There are many options to choose from if you want the cheapest auto insurance rates you can get. At times you may consider new ways of qualifying for them as well. Usage based auto insurance solutions offered with the help of technological advancements can be utilized by both good and risky drivers as one of the ways to save on car insurance.
What Is Telematics Car Insurance?
One of the new ways offered is telematics car insurance. It refers to the use of technology to remotely monitor driving habits and usage. In order for companies to offer great rates they may need to have more accurate and up to date information about your driving ability. These devices like Snapshot tell a lot about how good or risky driver you are to the insurer. These usage based car insurance policies are offered by more and more companies lately.
For telematics insurance, a monitoring device is fitted to the vehicle to transmit information about the speed, braking patterns, mileage and the hours of auto usage. For example, if you are using your automobile to go to work and come back and it is parked at the driveway most of the other times you may get considerable auto insurance discounts for low mileage drivers. Keeping within the speed limits and keeping good distance to reduce aggressive braking can help you further in your usage based auto insurance. However, you will be charged a lot more if you are driving at early hours of the day and displaying erratic driving patterns of speeding fast and braking hard.
Car insurance companies are hungry for more information all the time. If you are willing to give it to them you may be in for good discounts. Telematics car insurance policies can help good drivers with low mileages to save a lot of money. Since they are keeping it to basic needs they would be able to pay as much as they drive. Also, drivers would have no down payment car insurance as they can pay their premiums monthly based on the usage with some of the telematics insurance providers.
Alternatively, you may have had couple of unfortunate accidents and now you need to prove that you are actually a good driver with telematics auto insurance. This little device you allow insurers to put on your car will tell them everything they need about your driving skills. Instead of being put in a high risk driver category automatically you may choose to dictate your own category by being an even more careful driver.
Advantages & disadvantages of Usage Based Car Insurance with Telematics
The major concern among motorists is the fact that they are being watched by this little gadget. Simply you are allowing yourself to be spied on by telematics insurance providers. Some people may not be prepared to give way on this. Quite a few people have a dislike for big brother situation and some may even be paranoid about the whole they are watching us theory.
A recent survey carried out by Deloitte confirms the scepticism about telematics insurance. Only 1/3 of participants said that they would be alright with such programs. Naturally some more people would agree to it if they are compensated properly with reasonable discounts. Nonetheless half the participants would be convinced to try usage based auto insurance if they get at least 20% discounts. This is quite an agreeable outcome. Why should they allow any monitoring if there is not much in it for them.
It is worth mentioning that some companies like Progressive allow motorists to test their pay as you drive auto insurance programs. You can simply return the telematics device and go back to your standard policy if it doesn’t work for you after trying it for couple of months. It cannot be any fairer than that and it is worth checking out.
People must realize that these policies do not offer automatic discounts. If you are good and can prove it, you can get a hell a lot of savings. Otherwise, you may even end up paying more. This would be a good cue to join an advance driving classes. If even a small device can tell that you are no good driver it may be time to go back to school.
If you can get over the privacy issues usage based auto insurance may work for you. When you are confident that you are a better driver than your current records show this may be for you. You may like to grab the savings whichever way they come.
Pay Per Mile Insurance
As we discussed above, telematics insurance is based on your driving patterns as well as your mileage. However, there are programs that are solely based on your mileage and it is usually referred to as pay-per-mile car insurance. One of the companies that offer pay per mile insurance is Esurance. Their program works just like other pay as you drive policies but their telematics gadget only transmit mileage information back to the company. It doesn’t check anything else.
Pay per mile car insurance is likely to work better for drivers who drive less than 10,000 miles a year. Premiums are calculated as; base policy costs + per mile cost (usually very low per mile charge). Once you sign up you will be able to check your miles online and compare it with usual unlimited mileage standard policy costs. This type of policies may cost you more if you are driving a few thousand miles a year.
Again, it is a monthly car insurance plan and your premium is calculated according to automatic mileage readings from your vehicle. Pay per mile auto insurance may be appealing for people who may leave their automobiles in the garage for a long time because of work commitments aways from home or second residence and vehicle in a different location like vacation home.
MetroMile is another and new company that offers pay per mile insurance but they are currently available only in few states; California, Oregon, Washington, Illinois, New Jersey, Pennsylvania and Virginia. Their principle is the same as Esurance in the sense that they only look at mileage driven.