User Based Insurance Or Pay As You Drive
The insurance sphere has always been high on innovation and lateral thinking. After all, insurance (especially in third world and developing countries, like India) isn’t considered an absolute necessity, thus, insurers must constantly evolve their product to attract the right attention. In the same vein, the concept of ‘Usage Based Insurance’ is gaining prominence in the sphere of car insurance.
Usage Based Insurance is all about calculating the applicable insurance premium depending on the vehicle owner’s driving habits. It’s essentially the ‘Pay As You Drive’ model, wherein your usage of the vehicle decides the quantum of insurance premium payable. Expounding,The vehicle’s odometer reading is the primary decider of the applicable coverage. Coverage is also dependent on the location based data- as gleaned from GPS, Smartphone App and/or any authorized tracking device installed on your car that provides real time information on the overall car usage minutes. Other information collected from the car, including vehicle’s average speed, distance travelled, time taken per trip, etc., also contributes towards the vehicle’s coverage.
What is the role of ‘Telematics’ in this insurance format?
Broadly speaking, Telematics refers to the whole range of technologies and implements that send, receive and store information to and from any moving vehicle. A simple GPS device, a plug-and-play device for your dashboard, or maybe a tracking app on your smartphone, any of these implements is central to the concept of telematics usage based insurance.
How does this ‘spying’ impact my car insurance profile?
Usage Based Insurance, and the methods used to make it happen, can be deemed as ‘good spying’, where the data collected isn’t utilized in any marketing stunt, but rather, to evaluate your abilities as a driver. If you are a disciplined driver, your premium amounts are bound to be less. Hence, you will be solely responsible to assign your own premium amounts, without having to comply with a common rule that applies to a larger demographic. Stop paying for the irresponsible mistakes of others!
Well, I have a feeling like it is not for me. Being a disciplined driver is usually a hard task, Is it beneficial for you? Let us know in the comments :)