For many years, your Auto Insurance premiums have been determined in large part by
– Your age
– Your driving record and claims history
– Your credit
– The type of car you drive
– Where you live
There are many other smaller factors at play to be sure, but these five normally make up the bulk of the rate.Recent advances in technology have led to a new way for insurance companies to determine the rate that they will charge you.
First, it’s important to understand the challenges that every insurance company faces when trying to determine a fair rate to charge you for auto insurance. To stay afloat, insurance companies must take in slightly more in premium each year than they pay out in claims and underwriting costs. Charge too little and they can’t cover their costs, charge too much and clients might leave them for a less costly alternative. It’s a very fine line indeed.
For this reason, insurance companies use predictive modeling and large collections of data to help, well predict the future!
The amount of time your vehicle is on the road and how you operate it is valuable information. It is also a huge step in letting the consumer have some control over the rate.
Until now, this kind of information hasn’t been available, but now it is and its called “Telematics”.
Telematics devices may look differently between insurance carriers, some are a device that gets installed in the car and some are an app on your phone. Either way, they are all looking for the same info. Here is a glimpse into some of the information they capture and why….
- How many miles you drive (the more miles you drive the more likely you are to get into an accident)
- The amount of fast accelerations and hard braking you do (a predictor of future accidents)
- What time of day you drive (the worst accidents happen between midnight and 4am)
- How fast are you going? (Some can track your speed and while others don’t)
Many insurance companies have now adopted this type of technology. This allows the consumer a way to have some input on the rate they will be charged and earn discounts for safe driving skills.
The incentive? You can earn between a 20-40% discount depending on the company you choose and of course, how you drive. Be aware though that some companies may actually charge you more if you do poorly.
Will these programs actually save me money?
After seeing hundreds of our clients try these devices over the past few years I can happily say that the vast majority of them have saved money.
I drive well over 10,000 miles a year and still ended up saving 20%. Does your insurance company offer it? If so, you may want to ask about it.
Several companies allow you to monitor your progress daily. Then you may choose to opt out within the first 30-45 days without penalty if your results aren’t satisfactory. I actually loved this feature because it made me drive more defensively and safely that I normally would have.
Technology now gives insurance companies the ability to determine rates on an increasingly individual basis. Most of you are likely safe and responsible drivers. so show your insurance company that and reap the reward! Install the devices, generally for just a few months and see what you get! It may even make you a safer driver.
Please feel free to reach out to us with any questions! We are happy to help!