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The COVID-19 pandemic has affected the lives of all Americans. Given the current situation, most Americans are doing their best to save money. Nowadays, more and more drivers are switching to usage-based insurance programs. The surge in popularity for usage-based car insurance policies in this period is not surprising. Drivers who were affected by the current crisis can save money on their car insurance if they switch to a usage-based program.
To find out more about telematics, read the following:
- Many insurance providers are offering discounts for using telematics. Telematics are devices that track the driver's behavior, allowing the insurance company to provide a customized quote based on the driver's measured risk factor. Insurers like Allstate or Progressive are offering discounts of at least 5% just for agreeing to install a telematics device. However, drivers who have a very low measured risk factor can get a discount of up to 40% or 50%. Drivers who drive fewer miles than average drivers, or drive outside of busy rush hour traffic, might be considered to have a lower risk factor.
- How telematics work. There are several types of telematics. Some telematics are tracking devices installed by the insurer inside the vehicle. However, most insurance companies are now using an app or a dongle attached to a smartphone. The app uses the phone's location tracking and other sensors to determine the policyholder's driving habits. Based on the customized driver profile created by the app, some drivers might have a lower measured risk factor and pay lower insurance premiums.
- Which providers are offering telematics car insurance programs. Most major insurance companies are offering this type of insurance. Progressive is offering Snapshot where a telematics device is used to monitor the times of the day drivers use their cars, any sudden changes in speed, hard braking, and rapid acceleration, and other metrics. Low-risk drivers can save 10-30% with Snapshot. Allstate Drivewise program lets drivers view their last 100 trips and a breakdown of their driving behavior. On average, drivers can save about 10% to 25% using Drivewise. Besides large car insurance providers, some smaller companies or regional insurers are also offering telematics car insurance programs.
- Disadvantages of telematics devices. The first disadvantage is data privacy. Insurance companies can collect data like the places where policyholders go, how often they go there, how long they spend there, and other intimate details. Most providers have detailed data privacy terms attached to each telematics device. However, some providers might sell the collected data to third parties or use it in different ways. The second disadvantage is the difficulty to compare insurance quotes. Insurance providers want to make it as difficult as possible for policyholders to compare insurers and switch. For example, switching from a customized
$90per month plan to an unknown customized plan from another provider might be harder for most policyholders.
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