Drivers in the state of Nevada may soon have something to grin about besides the magic of Las Vegas.
A leading insurance company in the state is considering fielding a revolutionary car insurance rating system later this year. Dubbed as a usage-base rating system, the new system, its supporters say, will give more drivers better discounts and premiums that are more accurate.
The consumers pay only for the distance they have driven and how they have driven, reveals some industry experts. Unlike a similar program also tested in the state of California, the usage-based system also takes into account how motorists drive in addition to how often they take to the roads.
At present, insurance companies are conducting tests to determine if the program is viable. The system works by installing a non-GPS device on policyholders’ cars. These devices record the mileage of the vehicle, as well as the driving habits of drivers. Hard braking and sudden acceleration can result to higher premiums while safe driving will ensure discounts and incentives for drivers. Experts say that the intensity of driving will be a major factor in the computation of insurance premiums.
A similar system is also being considered in California. However, the proposed program will only take into consideration the total mileage and not the driving behavior of drivers.
Motorists who are fond of speeding up at intersections can see higher insurance costs when they renew their coverage while safe drivers are rewarded with discounts and benefits.
First, though, insurance providers have to figure out a way to fit the device in most cars. Advocates of the usage-based program say that the device has to be developed further for it to be installed in major car models. Installing the device is free, says a company spokesperson.
Industry specialists have not yet come up with the exact terms for the system because it is still in its infancy stage. Consumers who drive 10,000 or so miles every year can stand to benefit most from the system once approved. Experts also say that the average Nevadan motorist drives some 12,000 miles every year. The new system is expected to target these particular drivers because people who drive less than 10,000 miles a year are considered conservative.
Despite the optimism, the Nevada Division of Insurance still has to review the research and data submitted before approving the new system. It is believed that more insurance companies will follow suit and introduce similar programs, helping to keep down costs.