Usage-based auto insurance involves tracking your driving habits and using the data to compute your insurance rates. It is currently being offered by several insurers as an optional way of buying auto insurance. Most insurers will offer you a discount if your data shows you are a safe driver. However, usage-based insurance isn't for everyone. Here are three things that mean you can benefit from this novel form of car insurance:
You Have a Low Annual Mileage
The insurance company will only reward you if you lower your risk of getting involved in an accident. The more you drive, the more you risk getting involved in an accident. Thus, it follows that you can reduce your risk of an accident by reducing your annual mileage.
Consider the example of a school teacher and a salesperson. Suppose that the teacher lives near their school and only drives to and from work, with an annual mileage less than 10,000 miles a year. Suppose also that the salesperson drives all over the state, raking over 15,000 miles per year. In this scenario, the salesperson has a high annual mileage, which translates to a high risk of accident, which means they aren't likely to benefit from usage-based insurance.
You Drive When It Is Safe
When you drive is a huge factor in your accident risk. According to some statistics, the overall most dangerous time on the road, when most accidents occur, is between 5.00p.m. and 7.00p.m. (the rush hour). At the same time, the time between midnight and 4.00 a.m. is the most dangerous time to drive per driver. This means that, as an individual, this is the time of the day you are more likely to experience a road mishap.
Since telematics also tracks time of driving, your insurance carrier will have the data on when you drive. Therefore, you aren't likely to enjoy any usage-based discount if you drive during the most dangerous times on the road. However, you are a good candidate for this form of insurance if your car is mostly parked during these times.
You Are an Excellent Driver
Finally, you are also likely to benefit from usage-based auto insurance if you have mastered the art of good driving. Good driving may mean different things to different people, but according to insurers, it means you don't:
- Engage in hard braking
- Drive over the speed limits
- Engage in hard cornering
- Engage in hard acceleration
These are some of the behaviors most likely to cause accidents. For example, when you brake hard, you increase the risk that the driver behind you may hit your rear bumpers. Therefore, insurers may only give you the applicable discounts if you don't engage in these risky behaviors.
For more information, check out the sites of local insurance companies or give them a call.