With the huge technological advances that we have made, there is a new project in the offering in the auto insurance sector. It is called the usage-based car insurance cover. It is difficult to say if this technology will become a success in the future, as there are many conditions.
This project revolves around a ‘black box’, which is a small gadget that stores data. This technology is similar to the ones used in aircrafts to record and store data. The car insurance provider retrieves the data after the accident. This venture could go either way – it could bring down insurance costs for the customers or it go up and this would depend entirely on the data that is available and analyzed according to the usage-based coverage.
This gadget, installed by a professional, records all the relevant data such as speed, driving habits, the time of day the vehicle is driven, etc. This data is then sent for analysis to the car insurance provider to help in preparing the driver’s profile while calculating the risk factors. This analysis is also used to determine the drivers’ future premium. Privacy concerns are risen by numerous drivers, as this device will in fact relay other factors beyond speed.
The common issue however, is the expense involved in installing these devices. While the insurance company might cover some of the costs the insurer will have to cover some of the related bills along with the installation charges. If the insurer is a safe driver, and rarely drives, especially at night, then this usage-based car insurance technology will actually have the potential to save on the premiums. On the other hand however, if the driver is not a safe driver and does drive late at night, then the premiums charged will certainly be higher. Insurance providers are still in the process of testing.
