Usage-Based Programs Can Save You $100 a Month
Clearsurance.com recently reported on the best usage-based car insurance providers. Safeco customers could save up to $100 a month through this program.
Telematics, usage-based, and tracking describe car insurance coverage in which the policyholder allows the insurance provider to monitor driving behavior.
Safeco Rated #1
Safeco is rated #1 for usage-based programs. Customers who opt into monitoring automatically receive a discount, and as their driving habits demonstrate safety, they earn even more.
Farmers’ Signal program rewards drivers by up to $100. They offer a discount for opting in and rewards for safe driving.
Allstate ranks #3 and offers discounts up to 40% for drivers who practice the least risky driving behaviors. The Drivewise program even detects crashes and dials 911.
Liberty Mutual offers discounts of up to 30% to drivers with low-risk driving habits. However, drivers with high-risk behaviors may see rates increase at renewal. Most other providers promise not to raise rates due to monitored high-risk behaviors.
Progressive Snapshot pioneered the tracking program and became the standard. Drivers can save up to 30% with this monitoring program.
Saving With UBI Coverage
Most people wouldn’t agree to have their driving monitored without compensation. Insurance discounts are enough compensation for many people. But even with a discount, the original price matters.
Consider and compare these two examples. A driver gets a quote for $300 for a full coverage policy, and then finds out that opting into the monitoring program could save them 30%. As a result, he could get a $90 discount and pay $210 each month.
The same driver gets a quote from a second company for $200. They’re disappointed that this company only offers a 10% discount. But when they do the math, they realize that even though 10% of $200 is only $20, the final premium would be $180, which is cheaper than the first option.
Melanie Musson, a car insurance expert with Clearsurance.com, explains, “That’s why it is so important to compare car insurance rates. The original premium matters just as much as the discount.”
Popular Insurance Discounts
A usage-based discount is only one of many ways to save. Drivers can stack discounts. Some popular ones include the following:
- Anti-theft
- Bundling
- Claims-free
- Good student
- Low miles
- Military
- Multi-vehicle
- Safe driver
With stacked discounts, drivers can save over half on premiums. Bundling alone can save drivers 25%
Drivers can also save by increasing their deductible for first-party coverage and by opting for a lower level of insurance. These options increase the policyholder’s risk, but they are appropriate under the right circumstances.
Driving Behaviors Tracked by Insurers
Monitoring devices can be plugged into the car or downloaded as a smartphone app. These programs most commonly track the following behaviors:
- Acceleration
- Braking
- Phone use
- Speed
- Turns
- Time of day
- Time spent on the road
Hard braking, aggressive acceleration, fast turns, and fast speed increase a driver’s risk. These factors are tied to a statistically higher risk of being involved in an accident and filing an insurance claim, which costs the insurance provider money.
Often, in addition to using the information collected to determine risk, insurers also share data with policyholders to educate them on how to improve or congratulate them on their progress.
Potential Downside to Usage-Based Coverage
While most companies promise not to increase premiums based on driving behavior, some providers do not make that promise.
Before enrolling in a telematics program, a policyholder should make sure they won’t potentially face higher premiums. If that’s a possibility, the policyholder needs to be confident their driving record will demonstrate low risk and that they won’t face higher rates.
Another downside is that participating drivers have to share personal driving information. Many people don’t like the idea of a company monitoring their every move. Other drivers don’t care as long as they receive a reduced premium.
Read Clearsurance.com’s entire report here: 10 Best Car Insurance Companies That Use Tracking Devices.