Auto insurance

Should You Use This Little-Known Auto Insurance?

Image source: Getty Images

This can help careful drivers save big upfront.

Key points

  • Usage-based car insurance sets car insurance premiums by monitoring driver behavior, including when and how they drive.
  • These programs can help safe drivers get significant discounts on their premiums.
  • But they’re optional, so drivers don’t have to participate if they’re not comfortable being watched.

Cars are the primary mode of transportation for many people, and this utility often justifies the high cost of owning one, but not always. With gas prices soaring, many drivers are looking for ways to cut costs.

Driving less or ditching your car altogether are options, but there’s another strategy that many drivers overlook.

Usage-based auto insurance is on the rise

A growing number of companies are offering a usage-based car insurance option for interested drivers. This is where the insurance company monitors driving behavior, either through a mobile app or a small device installed in the vehicle.

Each program works a little differently, but many look at things like:

  • How many kilometers the car travels
  • The time of day it is driven
  • If the driver accelerates or brakes quickly
  • If the driver seems distracted while driving

The company then uses this information to determine the driver’s premium costs for the next policy term.

Benefits of usage-based car insurance

Usage-based auto insurance is a great way for careful drivers to save on their auto insurance. Many companies that offer usage-based insurance offer participating drivers an upfront discount. And drivers who perform well can qualify for further discounts on future premiums.

Check Out: Save Money With One Of These Top-Rated Car Insurance Companies

More: Check out our picks for the best car insurance companies

While most of these programs focus primarily on safe driving behavior, others focus primarily or exclusively on miles driven. This can benefit drivers who rarely use their vehicle.

Additionally, the feedback drivers get from participating in one of these programs can lead to safer driving habits in the future. For example, if the monitoring device detects rapid acceleration and braking, drivers can correct this behavior.

Disadvantages of usage-based car insurance

Not everyone who participates in a usage-based auto insurance program will receive a discount. While many companies swear they won’t charge customers extra if they detect high-risk driving practices, there are a few that add extra fees when it’s time to renew the driver’s policy. .

Then there’s the fact that these programs follow drivers wherever they go. This may make some drivers uncomfortable, and is likely why insurers are making usage-based auto insurance optional instead of mandatory.

In addition, the data collected by these programs sometimes lacks context. For example, a driver may apply their brakes to avoid a child or pet that has unexpectedly run down the street. While most of us would consider this to be good driving behavior, the monitor will register this hard braking as negative behavior. It also cannot tell who is driving the vehicle, so if someone else borrows the car, their driving behavior could negatively affect the policyholder.

Where to find usage-based auto insurance

These days, many major auto insurers offer usage-based auto insurance. Each company has its own name for its program, and not all programs are available in all states.

For most drivers, it’s best to get auto insurance quotes from multiple companies. Narrow options based on coverage, cost, and customer service. Next, review each company’s usage-based auto insurance program.

Find out how it works, the factors taken into account and the potential discount available before you decide to sign up. Keep in mind that it may be possible to register later if the driver chooses not to do so right away.

Usage-based auto insurance isn’t going away, and it can be a great way for careful drivers to lower their monthly premiums a bit. But the participation of drivers depends on them. Most car insurers offer many other discounts for drivers who don’t feel comfortable having their behavior monitored, so it’s still possible to get a great car insurance rate without it.

The Best Car Insurance Companies in Ascent for 2022

Ready to shop for car insurance? Whether you focus on price, claims handling, or customer service, we’ve researched insurers nationwide to bring you our top picks for car insurance coverage. Read our free expert opinion today to start.