Mileage-based insurance is getting more and more popular. Policyholders can save money on their insurance if they allow their insurers to track their driving habits.
The reasons for preferring mileage-based insurances by both the policyholders and insurers are the following:
- Mileage-based policies are highly customizable. These types of policies can properly reflect the true level of risk a customer pose. Mileage-based insurance is a type of policy where the costs are dependent on several factors like the type of used vehicle, how much time the vehicle is used, traveled distance, location, and the driver's habits.
- The premiums are accurate. Mileage-based (also known as usage-based) premiums are based on true, documented driving habits of insured drivers. Previously, insurance companies had to guess approximately how many miles a person traveled annually or hope that their customer's estimate was true. Unfortunately, many policyholders weren't always truthful.
- Is convenient. A small telematics device that is installed in the vehicle is used to monitor the number of miles driven, how a driver takes corners, how he accelerates and many other parameters. Usually, the telematics device requires access to an OBDII port. This port is located just under the steering wheel or near the fuse panel. At some insurance companies, these devices are only capable of tracking the number of miles driven by the vehicle in a month or for the entire policy period.
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