Driving habits are changing. More Americans are taking a backseat when it comes to transportation. Not only is the percentage of teen drivers decreasing, the percentage of middle-aged drivers opting out of license renewal is on the rise. These are some of the reasons the National Association of Insurance Commissioners (NAIC) thinks you should rethink your auto insurance options and consider usage-based insurance.
Currently, only about six percent of American drivers are using usage-based insurance (UBI), and, according to LexisNexis Risk Solutions, less than half of the country’s consumers are aware it is even an option. The same study found that when drivers are presented with the option of UBI, half of them do opt in.
Usage-Based Insurance Basics
Usage-based insurance examines driving habits, such as speed, miles driven, time of day and hard braking, to determine insurance rates. These factors are most commonly measured using a plug-in telematics device provided by an insurance company. With your agreement, data is sent to your company, and, in some cases, you may qualify for discounts if it shows you are practicing safe driving habits.
Another perk of these programs, aside from discounts, is that it makes motorists more aware of their driving practices, which can lead to consumers making changes to become safer on the roads. In a study conducted by the Insurance Research Council, 56 percent of drivers polled said they have made changes in their driving habits since installing a telematics device in their car.
Deciding if UBI is Right for You
With usage-based insurance gaining traction throughout the nation, NAIC has launched DriveCheck, an assessment to help consumers determine if UBI is right for them. The assessment asks you to honestly answer a few questions regarding your driving habits. Based on those answers, DriveCheck gives you an estimate of whether or not UBI may be a good choice for you. You can use this resource by visiting www.insureuonline.org/drivecheck.htm.
Getting in on the Trend
DriveCheck also offers you more information on UBI and a link to find a provider in your area. A lot of the big, nationwide auto insurance companies offer some form of UBI. Though not every state is covered by every company, coverage is widespread enough to encompass the country from coast to coast.
These top insurers offer plug-in telematics devices for UBI programs:
- Progressive (Snapshot)
- Allstate (Drivewise)
- The Hartford (TrueLane)
- Nationwide (SmartRide)
- Travelers (Intellidrive)
- SafeCo (Rewind)
Other Ways to Save
Though usage-based insurance may not be for you, there are still ways to save on car insurance costs. It is always a good idea to go over your policy with an agent and discuss any discounts that may be right for you. A surprising number of discount are available that many drivers may not even be aware of, including ones for things like driver education courses, anti-theft devices and low mileage. Taking your insurance into account as part of the total cost of vehicle ownership is not something to be overlooked.
The Bottom Line
Insurance, along with other car-related expenses, such as fuel and maintenance, can really add up and should be factored in anytime you are considering the purchase of a vehicle, especially if you have credit challenges. Keeping your costs low in these areas may help you keep more money in your budget for other purposes.
If you are looking to purchase a car, but think bad credit may stand in your way, Auto Credit Express wants to help. Our network of dealers and their lending resources specialize in assisting people in various credit situations. There is no obligation and our online auto request form is free. Get started by filling one out today!