Should you try usage-based insurance (UBI)?
Car manufacturers are constantly leveraging technological advancements to help us drive more safely. From back-up cameras, blind spot detection, and lane departure warnings, to a future that promises widely available self-driving cars, as the technology advances, so do our ways of driving.
But, what about our insurance policies? Are they adapting to keep up with these new tech developments? Car insurance, as an industry, has too often adopted the attitude of “same goods, different prices.” The price you’ll pay is determined, and justified to you as the consumer, based on metrics such as your gender, age, marital status, education, or even your credit score. While these factors have been shown to have some utility in determining your relative risk for accidents or insurance claims, they could also have you paying higher insurance premiums — even if you yourself are a safe, sensible driver!
Enter usage-based insurance
Usage-based insurance, or UBI, uses telematics (a group of technologies that monitor your driving) to gather accurate, real-time data specifically about how you drive — not about how you would hypothetically drive based on your demographic information.
With UBI, the safer you drive, the less expensive your insurance premiums will be. Usage-based insurance works by placing a telemetry device in your automobile. This telemetry device is hooked up to your car’s on-board diagnostics port, or may work in conjunction with a phone app. It then works by capturing data from all on-board sensors to produce a driving profile. Your driving profile takes into account factors such as the time of day you drive, how many miles you drive and at what speed, as well as driving behaviors such as hard braking, abrupt acceleration, how you take corners, and phone usage, and is used to determine the cost of your car insurance premium.
What metrics will affect my driving score?
Which specific factors will affect your driving score, and ultimately your insurance premiums, will vary from company to company. However, as mentioned above, there are a few metrics that most companies tend to use. These can include:
- Time of day. When are you doing most of your driving? How many other cars are you sharing the road with? Is it rush hour or 2:00 pm on a Tuesday?
- GPS location. Where are you driving? Are you battling your way through the middle of downtown Manhattan or taking a leisurely drive down a rural road?
- Sudden changes in speed. Accelerating to a stop was never a good idea. Now, it can affect your insurance premiums too. Always give yourself plenty of room to brake, and avoid stomping on the gas pedal when you need to get going again.
- Phone usage. We’ve said it before, and we don’t mind saying it again here — you know you shouldn’t be on your phone while driving to begin with! Now, you have financial, as well as safety incentives, not to fidget with your phone while behind the wheel.
- Distance driven. Shorter distances mean less time on the road, which means less liability. If you’re usually only driving to the store and back, you shouldn’t have to pay the same insurance rates as a frequent road-tripper.
What are some reasons to try UBI?
We believe that telematics and UBI are the future of car insurance. In fact, they’ve already begun to grow in popularity among drivers who avoid taking risks, prioritize safe driving, and are interested in the incentives UBI has to offer — or, the kind of drivers insurance companies are more than happy to work with.
If you’re still not quite convinced, continue reading for five great reasons to give telematics and UBI a try.
Substantial savings
If you choose to opt in to telematics monitoring, and you make a concerted effort to drive safely, you could save as much as 30 to 40 percent on your car insurance premiums depending on the carrier.
Examine and improve your driving habits
In addition to monitoring and reporting your driving behaviors to your insurance company, telematics can provide feedback and real-time warnings in risky situations. They can indicate if you’re braking too hard, driving too fast, or looking at your phone instead of the road. Driving with telematics can not only save you money, but improve your personal safety as well.
Gamify it!
One of the more entertaining benefits of telematics is the ability to produce a personal profile on your safe driving habits. Now imagine a family argument breaking out where Dad claims to be a better driver than Mom. They can now literally compete for the top spot and decide a winner based on telemetry data, rather than speculation. Make it a family game, where safer driving is the prize.
Hassle-free sign up
Signing up for telematics and UBI is simple! At many companies, Elephant included, signing up is as easy as clicking a link and filling out your information. After that, depending on the carrier, you will receive your telemetry device or a link to the app, begin recording your driving habits, and earn your new, (hopefully) lower rate.
Telematics is the future
Telematics design a future for car insurance based on meritocracy. A future where better drivers are rewarded for better driving habits, and where insurance companies can offer cheaper policies safely based on an individualized risk assessment. Telematics as a car insurance norm can ensure a superior insurance experience and incentivize safer driving for all who participate.
Other predictions for how UBI will improve car insurance
Real-time risk warnings
As telemetry technology continues to develop over time, real-time risk warnings will become more and more accurate, leading to fewer accidents.
Superior claims experiences
With some carriers, UBI can make the claims process easier for all involved by utilizing the abundance of accurate data. If you get in an accident through no fault of your own, telematic data will be there to back you up. It will take a “he said, she said” situation and turn it into one where what the data says matters most — as it should be.
Personalized policies
UBI and telematics base your policy price on your driving, not anyone else’s. This leads to fairer prices, and ensures you get the rate you deserve. Overall, this is a much fairer, merit-based process of determining premiums.
Happier customers
Customers will understand the inherent fairness of a system based on their own driving habits. No one likes to feel as though they’ve been overcharged or unjustly accused — with telematics, premiums will align with the data in as fair a way as possible. This will create happier customers with a better overall insurance experience.
Weather warnings
Heading towards bad weather? Does a major storm lie right in your path? Well, with GPS data being sent through telematics apps, you’ll be notified of the oncoming danger and can adjust your route accordingly.
Real-time feedback for young drivers
We can never overstate the importance of developing good driving habits early. When you’re new to driving, knowing how fast to break can be tough. Not to mention, this is something that varies vastly between vehicles. With real-time feedback, young drivers will quickly learn to correct their driving mistakes, both keeping them safe and producing overall better drivers.
Telematics for home insurance
Telematics is not just the future of car insurance, but will likely be relevant to the future of insurance in general. Just like safer drivers using UBI, with telematics for home insurance, homeowners who take better care of their homes will be able to save on their insurance premiums. To give one example, a proactive homeowner who responds quickly to property maintenance issues is going to be less of a risk to an insurance company than one who neglects their property.
So, is telematics worth it?
We think so! If you’re a safe driver, and don’t mind sharing some of your information, then telematics is most certainly worth a try. Not only is it the insurance of the future, but it’s a solid way to save money and improve your driving.
At Elephant, we’re looking forward to launching our upcoming telematics app to better reward our policyholders for safe driving. Upon launch, customers can download the app and drive normally for a period of time. Based on their driving, they may qualify for future savings on their auto insurance policy. If you’d like to opt in, the app will walk you through set-up step by step, and you’ll receive a discount just for downloading. If you’re thinking about trying it out, you’ve got nothing to lose, and both discounts and safer driving skills to gain! Get a quote today.
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