Behavior-Based Car Insurance Is Coming, How to Be Prepared

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With all of the variables at play when it comes to car insurance, another will soon be joining the ranks—your own behavior.

Current onboard diagnostics only track what the vehicle is doing, but behavior-based insurance will measure both driver behavior and vehicle usage.

Why Auto Insurance Keeps Increasing Year to Year

Most variables when it comes to auto insurance only estimate a driver’s risk based on rough demographics such as gender (which is illegal in some states), age, vehicle type, location, driving record and credit score.

Since 2011, insurance premiums have continued to rise, going up an incredible 23 percent, and there are several reasons why. Some of those include the economy doing well, cheap gas prices, people spending more time on the road and high employment rates.

Modern vehicles also contain more expensive technology than they used to, which can make them more expensive to fix in return if something does go wrong.

Insurance fraud is another part of the equation, such as when people lie about how far or how often they drive, and it makes it harder for insurance underwriters to know if they should be considered a good or a bad risk.

Insurers also have to rely on customers to report claims, so if they wait too long or lie about what happened, premiums can be driven up as a result.

How Insurance Companies Plan to Move Forward

Another reason why insurance costs have gone up is because of new technology, such as smartphones, creating a distraction for drivers. However, that same technology is now being used as part of the cure.

Smartphone sensors are now being installed to help prevent device usage while driving, and other onboard driver-assistance features such as lane-keeping assistance and emergency braking can help keep distracted drivers safe.

Other methods of keeping up with driver behavior include apps like Waze, and the ability to lock devices if a car reaches a designated speed.

With all of the real-world data currently at hand, insurers can use this information to create a better stock of risks, and it can help drivers pay more attention to how their own actions might affect insurance rates.

Every new month means a chance for the data to become more accurate, and can help improve the future of auto insurers so that they can become more fair and reliable.

It can also help reward safer drivers by making car insurance more affordable. In other words, if you’re behind the wheel of a car, insure that you’re staying safe and following the rules of the road to help lower your insurance rates.