Usage-based insurance (UBI) has become popular among various auto insurance companies over the past few years. An onboard device collects driving information and transmits it to the insurance carrier via cloud computing. Drivers also get access to the data, which can be used to improve their own driving habits.
The device plugs into a diagnostic port that is usually located beneath the steering column. In most vehicles, the port is easily located and accessible because it is where mechanics plug in their computers to analyze the car’s functions.
Is It Right For You?
These onboard telematics, as they are often called, gather and transmit data regarding one's driving habits. The exact monitoring techniques may vary to a degree, but such devices typically assess acceleration, cornering and braking. Ideally, such a system can provide valuable feedback to a driver. Armed with this information, a motorist can ultimately save gas and prolong the life of brakes and other components.
Variables that can be related to insurance risk are quantified. For example, such a device can detect how often one slams on the brakes and how often one drives during statistically riskier hours like midnight to 4 am. Onboard telematics also employ GPS to determine the distance travelled. Those that drive less usually qualify for lower insurance rates.
Insurance carriers may offer a "test drive" during which a motorist can get a feeling for how helpful the feedback is, and potential savings can even be measured. A driver can track the accumulating usage data online.
Those that promote UBI assert that it keeps good drivers from, in effect, subsidizing those with poor driving habits. Essentially, UBI allows a personalized analysis of one's good driving habits, and this translates into lower, more personalized premiums. The use of these onboard telematics to influence auto insurance premiums is quickly expanding. Some industry analysts suggest that more than one in five policies will be usage-based within the next five years.
It is also believed that, as motorists become more self-aware of distances traveled, they may reduce unnecessary driving. The benefits of reduced driving can include reduced fuel expense, insurance savings and extended vehicle life.
Learn if this coverage is right for you. Call Insurance Planning Service at (734) 421-9900 for more information on Michigan auto insurance.