One way you can cut down on your monthly expenses is to drive less and consume less fuel. This idea has helped popularize “usage-based auto insurance,” which, like the name suggests, bases rates on how much and how well you drive. For many people who no longer need to commute to work during the pandemic, usage-based insurance (UBI) can mean significant monthly savings.
Usage-based Insurance Trends
Even up till the pandemic, driving miles were on a steady rise. However, the pandemic led to widespread shutdowns, layoffs, and furloughs that affected driving patterns. Now many Americans are adopting remote work as an alternative to daily commutes. As work at home opportunities become more common, there will likely be a corresponding trend of cost-cutting on auto insurance.
A recent survey published by Tower Watson of 1,000 Americans reveals an increasing number of drivers are shifting to usage-based auto insurance plans. The poll found that 79 percent of Americans are considering switching to this more efficient plan. The same survey found that 88 percent of respondents are willing to switch if it doesn’t raise auto insurance rates.
Telematics Technology for Measuring Usage
The key to determining auto-driving usage is a new IoT device installed in cars using telematics technology, which monitors speed, braking distance, and other driving metrics. The technology identifies vehicle location and how far you drive. This data is sent to your insurance company, which then calculates your usage-based auto insurance rate.
The data allows your insurer to analyze your driving behavior, particularly on safety issues. It essentially tracks where you go and how safe you drive, including your speed when you make sharp turns. The more your insurer considers you to be a safe driver, the better are your chances at lower monthly insurance rates. If the firm thinks your driving is unsafe, you will be paying higher premiums due to the greater risks of causing an accident.
For some drivers on tight budgets, the top priority is to do whatever it takes to lower auto insurance costs. Many people have tried cutting costs on entertainment, only to be depressed by missing out on fun activities. The more feasible alternative is saving more on driving habits instead of cutting down on entertainment. This view has compelled the individual to consider other transportation options, including walking or riding a bike, while preserving their entertainment budget.
The pandemic has created economic uncertainties for many Americans, forcing them to rethink their lifestyles. Simultaneously, people are increasingly interested in going green, which includes driving less to reduce greenhouse gases. Cutting insurance costs adds to the equation of maximizing your monthly budget and reducing waste. Besides, some people are considering UBI to grow their emergency funds.
Towards a Safer Society
With this new technology, motorists who brake too hard or drive over the speed limit are at risk of paying higher insurance rates. Many drivers may be apprehensive about adopting this type of program because it will force them to rethink their “joyriding” habits. It also raises questions about personal privacy.
Hence, it helps drivers resist undesirable driving behavior, preventing traffic violations, and making the streets safer for everyone.
The use of telematics has spread to all 50 states, as each state now allows for at least four personal UBI auto programs. The more the public becomes aware of telematics and its multiple benefits, the more likely they will want to try out UBI.
Americans have multiple reasons to consider switching to a usage-based insurance auto insurance policy, as it opens the door to building savings and driving more responsibly.
Contact us at East End Insurance Agency to learn more about UBI, telematics, and cutting your auto insurance costs. Our reputable agents have many years of experience in assisting their clients with almost any type of auto insurance situation and can assist you in getting the exact coverage you need. Contact us today!