Technology is responsible for how businesses have changed their way from earlier times. An era once dominated by brick-and-mortar stores now has seen the rise of digital-only establishments. This is true even for buying insurance policies. Now, you can get car insurance policies from a traditional insurance agent, or even online. The online policy has its own set of merits offering the convenience of purchase along with ease of comparison of the available options.
Moreover, since the pandemic began, hybrid work culture was introduced where one need not travel to work each day. This has limited the use of vehicles even more. Thus, a flat rate insurance policy does not suit an individual who sparingly uses their car. This is when the idea of usage-based insurance came into the picture. With this new type of insurance coverage, you can save on premiums depending on its use. Here are some of the benefits and features of usage-based car insurance.
But before that, let’s take a step to understand what usage-based insurance is and how it works.
A usage-based insurance policy arrives at the premium depending on the driving rather than a fixed car insurance price. In this calculation, the distance travelled and the driving behaviour are two important factors that decide the policy premium. The data from your car about speed, acceleration rate, braking pattern, and your phone usage while driving is used to calculate your policy’s premium. Thus, good driving is rewarded and helps you save on premiums.
To determine car insurance prices, usage-based insurance uses a telematics device. This device uses telecommunication and informatics to determine the above factors of how your car is driven. Other than a dedicated telematics device, pay-as-you-drive car insurance or usage-based insurance uses on-board diagnostics sensors which are installed on the OBD-port of your car. These sensors store real-time driving data and share them with the insurance company. Other than that, a plug-in device, a GPS device, or a mobile app are some other ways to track the driving behaviour of your car. *
What are the different types of usage-based insurance plans?
Usage-based insurance plans are of three prominent types:
- Pay-as-you-drive where the premium is calculated on the distance covered.
- Pay-how-you-drive where driving behaviour is considered to determine the price.
- Pay-as-you-go which is a combination of pay as you drive and how you drive.
* Standard T&C Apply
What are the advantages of pay-as-you-drive insurance?
- The policyholder is rewarded for safe driving
A good driving record can help you get rewarded for your driving behaviour and accordingly get a customised policy premium. *
- Encourages safe driving
Since insurance premiums are directly impacted due to driving habits, a pay-as-you-drive policy encourages safe driving. *
- Aids in investigation
In the unfortunate situation of an accident, the telematics device can help discover the reason, reducing its possibility in the future. *
- Assistance in times of theft
Since vehicles are fitted with tracking devices, they can be used to geographically track a stolen car when you buy a pay-as-you-drive insurance policy. *
- Lowers the chances of fraud
With the help of telematics devices, the chance of a fraudulent claim is reduced. *
- Helps in claim management
The driving and tracking data recorded can help to manage and inspect claims for the insurance company. *
* Standard T&C Apply
Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.