When I talk with someone about Texas car insurance I cover a number of items with them including the kind of vehicles they have, who drives which one, and how the cars are driven. Add to this data a person’s credit or insurance score along with their accident and ticket history and I’m able to provide any Texan with an accurate car insurance quote.
Most car insurance companies rely on actuarial data, statistical analysis on large sets of historical numbers to rate people based on the items listed above along with age, gender, marital status and living type (single family home, renter, etc.). One of the top consumer complaints about this method of evaluation is that it doesn’t reward someone for being a safe driver.
If you could prove you’re a safe driver would you be interested? If that involved monitoring your driving with a possible reward of paying less for your car insurance, would you still be interested? If so, you’re a candidate for usage based insurance.
Usage based car insurance involves allowing a car insurance company to specifically measure your driving for a period of time. A device is placed in your vehicle to measures specific data which is then reported directly to the insurance company. The amount of time the device is plugged in to your vehicle may vary slightly but could be up to 6 months. Progressive Insurance provides such as measuring device through its Snapshot program.
The Snapshot device is plugged into a vehicle’s onboard diagnostic port typically located under the steering column in most cars with a model year of 1996 or newer. It will remain there for up to 6 months and it measures three criteria:
- Hard breaking
- Your mileage or how far you drive
- What time of day you drive
Snapshot is not a GPS or camera and it does not measure the following items:
A person enrolling in Progressive’s Snapshot program can utilize this for one or all their vehicles, provided they have an onboard diagnostic port. There’s no cost to participate, nor is there an immediate discount for participating. A person’s driving is measured initially for 30 days prior to any discount being offered. If a person qualifies as a safe driver, they are eligible to save up to 30% on their premium. The monitoring ends at the policy’s renewal which could be up to six months and the Snapshot device is returned to Progressive. If the driver does not qualify, then the worst case outcome is they receive no discount; there is not a punitive increase on their premium.
The benefit for someone who chooses to participate in a UBI program and is recognized as a safe driver is a reward for their safe driving by paying a premium based on their driving behavior. In Progressive’s case, the savings could be substantial.
According to Insurance Journal, most of the top 10 car insurance companies have UBI programs with the notable exception of Geico. Progressive leads awareness among all consumers surveyed recently with 78% being familiar with Snapshot as compared to 8% for Allstate’s and 6% for State Farm’s programs. Part of the reason for this is not all carriers offering UBI programs have released them in all states yet. Progressive is currently in 44 states while Allstate’s Drivewise program is only available in 20 states.
Consumer acceptance of UBI is nearing a tipping point and predicted to explode in the next several years if insurers are able to address privacy concerns. Most people reluctant to try UBI cite two fears: their destinations will be tracked and their data will be used to invalidate claims.
What do you think? Would you be willing to enroll in one of these programs if it were available to you? Let me know your thoughts, questions, and concerns in the contents section of our blog or on our Facebook and Google + pages. We can help you explore this more closely.