On average, it costs UK car owners £388 to drive their own car, according to Motoring Research. Lucky for you, looking for cheap insurance options can be a pretty easy way to cut this cost, and leveraging the usage-based insurance discounts might help. For long, insurance agencies have been using factors like age, sex, location and driving history to pick an insurance rate for their clients.
By using a data-based approach, usage-based insurance allows agencies to do away with questionnaires and decide your insurance rate using your actual driving habits. Most agencies will offer you a discount for just signing up. As long as the data proves that you are a low-risk driver, then you can enjoy low monthly rates throughout the lifetime of your vehicle.
Read on to learn whether it’s the best insurance option for you:
How It Works
At first, you will need to pay a base rate when starting out with the company. As you proceed to drive your vehicle, you will be charged according to the data that they collect. For you to benefit from the discount, you must agree to install telematics devices in your vehicle. While some vehicles come with the devices, others don’t. The devices record and transmit data about your vehicle, including its mileage, system health, and even location.
They also record your driving habits, such as hard braking, over-speeding, and bag deployment. If you’re a learner driver looking to gain good driving habits, you can start off with an intensive driving course so you can pass your driving test as quickly as possible. Once you’re confident of your driving skills, you don’t have to worry about this data. Some agencies will only use your driving mileage to determine your rate, and others will use both your mileage and driving habits data.
Why You Should Consider It
With this data in their hands, your insurance agency can give you a rate that rhymes completely with your driving habit. For instance, if you rarely drive your vehicle, you will be charged less. Also, the fact that your insurance pricing depends on how you drive can urge you to be a better driver.
Simply put, you control your rates. The telematics devices record data that can easily help you gauge the health of your vehicle. As an additional benefit, this can help you stay ahead of maintenance issues. In case you get involved in an accident, the data can easily prove whose fault the accident was, shortening the insurance claim process.
Understand What Your Agency Will Do with the Data
Insurance companies mainly need data concerning your mileage and driving habits. The telematics devices, however, collect more data than this, which is stored in the databases of the insurance companies. Ideally, this will mostly be treated as data as rest.
Since some of the data they collect contains information like your typical driving location, it is ideal to find out what they plan to do with the data. Only work with an insurance company that takes security as a priority. If a breach occurs, there is no telling what cybercriminals might do with it.
Are You The Best Candidate For This?
The last thing any driver might want is to apply for usage-based insurance only for their insurance rates to rise. While great driving habits will lower your insurance premiums, a poor one will lead to you paying more. If you feel that your driving habits are questionable, this might not be the best option for you.
On the other hand, if you typically drive your vehicle a lot, or over long distances, the conventional insurance could be the best option for you. Since agencies need your mileage to calculate your rates, high mileage will increase them. The more you drive your vehicle, the more wear and tear it goes through, which is riskier to these agencies.
Usage-based insurance is a great option for careful drivers. Other than cutting their insurance costs, installing telematics devices can help you in maintaining your vehicle. Consider applying for usage-based insurance if you feel that you fit the profile outlined above.