– Is It Worth It?
It’s not only your car that’s going to get a dent when an accident happens but your credit score as well if you don’t get things done right away.
Michael Aminov-Tobin was shocked when the car insurance company offered $100 discount on his insurance rate for his 2016 Hyundai Veloster Turbo. It skipped his mind that they were actually monitoring his driving and was not mindful of how hard he hit his brakes or even his driving speed.
Aminov-Tobin is 25 years old and runs a video production firm from his home which is close to Columbus, Ohio. He relates that he went “Holy crap, that’s awesome!” when he saw how the price went down like it did.
Michael was able to take advantage of the UBI, or usage-based insurance, which is the latest thing now where the driver’s driving is being electronically tracked or monitored by their car insurance company and in exchange, the company offer their clients discounts.
If you are a low-mileage user or a disciplined driver, this offer would work great for you. However, according to experts, these programs present notable concerns regarding the aspect of privacy.
Drivers or clients should first study the program, ask the right questions and get proper understanding of the risk to their privacy before they sign any agreement to be tracked or monitored.
Ting Zhu is an associate professor in Purdue University’s Krannert School of Management and has been studying the UBI program. She says the data they get is really rich that they know the exact details of where and when you go.
How do drivers benefit from this?
The advocates say that it just makes the auto insurance pricing fairer if you let people validate that they are careful or safe drivers.
Usage-based policies determine part of your insurance rate by the way you drive with the use of telematics technology where data is transmitted through a smartphone app or a plug-in device.
As opposed to the regular insurance rates where they only use driving record, location, marital status, and age.
Consumer Federation of America’s director of insurance Robert Hunter says that good drivers should pay less and that your rate should be determined by how you drive and not by who you are.
It saves to be a good driver
If you are a good and careful driver, the discounts are really substantial. Personal Lines’ senior vice president says that the discounts can reach 40% with the Nationwide’s SmartRide.
Alex Timm, the CEO of Aminov-Tobin’s choice of insurance company, Root Insurance give the best drivers rates that can cut nearly half of what they’d been paying for.
The executive of both companies say that the average savings good drivers get are around 20%.
How about the low-mileage drivers? How do they benefit from this? Evan Makovsky is a 42-year old from Hoboken, New Jersey and has a 2009 Volkswagen Passat that he drives mostly on weekends.
He switched to Metromile where he’s charged a per-mile rate plus his monthly base rate and he estimates he’s able to save $1000 a year since switching.
Depending on your driving style or habit, usage-based insurance rates aren’t always the better choice. For example, for some important reason you’d have to take a longer commute, the pay-per-mile program might cost you more.
Progressive Insurance’s Snapshot program is an example of better choice for you where it monitors how you drive. According to the insurer, rates reach up for about 20% of drivers.
If you are not a disciplined driver, you won’t pay extra at Nationwide but you might lose your initial discount.