The number of usage based car insurance policies is set to dramatically increase over the coming years. What is a usage based car insurance policy I hear you asking? Well, it is time to find out because according to research for the car insurance industry you might such a policy very soon.
To have a usage based car insurance policy you will need to have some sort of device in your car that monitors and records the way you are driving. This information is then sent back to your insurance company who use it to adjust your premium based on the way you drive.
The Northern Ireland-based insurer Autoline sells a usage based car insurance policy to younger drivers. It works through an app on your mobile phone. They give you a cradle for your phone when you take out a policy and then you are responsible for starting the app before every journey. The app tells your insurer:
To have a usage based car insurance policy you will need to have some sort of device in your car that monitors and records the way you are driving. This information is then sent back to your insurance company who use it to adjust your premium based on the way you drive.
The Northern Ireland-based insurer Autoline sells a usage based car insurance policy to younger drivers. It works through an app on your mobile phone. They give you a cradle for your phone when you take out a policy and then you are responsible for starting the app before every journey. The app tells your insurer:
- The dates and times when you drive
- Your acceleration and braking
- Your G-rating which is essentially how hard you corner
If you drive in a way that is regarded as risky you might see your premiums go up. But if you drive safely Autoline may adjust your premiums down.
Why Are Insurers Moving to Usage Based Car Insurance?
The insurance industry has traditionally been based on a business model that effectively lumps all customers’ risks together. The result is that good and honest drivers subsidise bad drivers and fraudsters. The insurance companies do their best to charge people who represent a higher risk more than those who don’t, however it ultimately comes down to profits. So we all end up paying more.
As you might expect, giving us cheaper car insurance is not at the top of the priority list for most insurance companies. They want to make more money and that is their main driver for changing their business model to one that calculates premiums based on usage.
But in Europe there are thought to be over two million drivers who have some sort of usage based car insurance policy. And while the insurance industry’s main motivator is profits, they are also being pushed along by the European Union and governments.
So you should expect to see usage based car insurance policies become more common over the coming years. If you drive carefully that should be a positive thing as your premiums should start to fall. There are issues to iron out, but for most of us it should mean cheaper insurance.
Why Are Insurers Moving to Usage Based Car Insurance?
The insurance industry has traditionally been based on a business model that effectively lumps all customers’ risks together. The result is that good and honest drivers subsidise bad drivers and fraudsters. The insurance companies do their best to charge people who represent a higher risk more than those who don’t, however it ultimately comes down to profits. So we all end up paying more.
As you might expect, giving us cheaper car insurance is not at the top of the priority list for most insurance companies. They want to make more money and that is their main driver for changing their business model to one that calculates premiums based on usage.
But in Europe there are thought to be over two million drivers who have some sort of usage based car insurance policy. And while the insurance industry’s main motivator is profits, they are also being pushed along by the European Union and governments.
So you should expect to see usage based car insurance policies become more common over the coming years. If you drive carefully that should be a positive thing as your premiums should start to fall. There are issues to iron out, but for most of us it should mean cheaper insurance.
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