Ever wondered that how you drive, and how much you drive could define the insurance premium for your vehicle?
Usage Based Insurance is seeing substantial adoption by insurance companies. It is changing flat rate insurance structures, with more dynamic insurance structures for your vehicles.
Usage Based Insurance systems encompass:
Charges for your car could be based on the distance you drive. For the days or months that you are out of town and don’t use the car, you could actually land up paying near zero premiums for those months.
Your driving behaviour and discipline could define the insurance premium you pay. If you are rash driver, then UBI policies are not for you. But if you are in your 50s, have a car, and are a peaceful and safe driver, a UBI policy could help you save a lot of money on your premiums.
A simple electronic telematic device can be connected to your car by your insurance provider. Some cars come pre-installed with such devices, and the insurance company will accept data from such devices for setting your UBI based premiums.
Who offers this
Progressive Insurance Company and General Motors Assurance Company, started a distance linked insurance discount scheme for car owners. It used telematics that captures the distance car moved, with the insurance rate being dynamic computed, by the amount of time the car was actually running.
Who is benefited
Both customers and insurance companies are equally benefited. Customers get the option of choosing an incentive based policy. This translates to more accurately priced insurance premiums and discounts for good driving behaviour. The insurance companies are also benefited by repeating substantial returns on investments, and being able to secure a strong book of business with reduced losses.
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