Usage Based Auto Insurance is Coming

Usage Based Auto Insurance – the coming trend you cannot avoid

It is the next big thing on the auto insurance horizon. Usage based insurance means auto insurance carriers can track your driving habits and base (at least in some part) your premium on those habits.

Like to drive late at night or routinely break hard? You may pay more in auto insurance premiums than your neighbor who does not do these things.

Progressive Insurance has an optional program called “Snapshot”. A device is installed (easy to do) into a port underneath your dash. It sends a signal back to Progressive and lets them know your driving habits. This program is not for everyone. However, if you answer some basic eligibility questions and after six months demonstrate that you qualify based on your driving habits, this device can save you up to 30% on your premiums.

The thing with Progressive Insurance – they WILL NOT raise your rates if their Snapshot device shows you do break hard, drive late and, in essence, do not quality for the program. It simply rewards those drivers who DO drive more safely and comply with the program. The device also cannot be used in a claims situation against you, according to Progressive.

The point behind Progressive’s method seems to be – we will dangle lower rates in front of you if you do these 3 or 4 things. What’s to not like about that?

Usage based insurance looks at driving habits & factors, such as whether you apply your breaks harshly, drive late at night, speed and drive higher mileage. Insurance companies will begin pushing for more technology such as this to help them further determine which clients are the best risks and reward them with lower rates.

75% of insurance companies are currently testing or beginning pilot programs for usage based auto insurance. Roughly 20% of insurance carriers are already running usage based programs. 8 of the top 10 insurance companies are using usage based technology or in the testing phase already.

Ohio Raising Minimum Limits – Arizona should as well

The State of Ohio House and Senate have agreed on a bill that would increase the minimum levels of car insurance coverage from $7500 to $25,000 for property damage and $12,500 on bodily injury to $$25,000.

This is the first time Ohio has changed their minimum limits since 1969.

Property Damage – your own policy covers damages to other vehicles (and other property) when you are at fault.

The big challenge has been consumers carrying the lowest property damage limits and then causing damage to other people’s vehicles that are worth far more than the $7500. This puts other drivers who are completely innocent in financial jeopardy because another driver carried too little coverage.

Bodily Injury – your own policy covers damages to injuries you cause when you are at-fault in an accident.

The result of raising the minimum levels of insurance will be a higher cost to consumers who have the minimum limits. The actual cost to policyholders will vary from driver to driver based on their driving record. Typically, those who carry the state minimum limits are those with the worst driving records. Due to a poor driving history their auto insurance rates are inflated and in response they sometimes choose to cut back their coverage and save money. It is a difficult situation for those in this situation. However, protecting the public is the central issue. Opponents will argue that movements such as raising the minimum limits will cause more drivers to drive uninsured.

While we have great sympathy for those paying high auto insurance premiums owning and driving a vehicle means doing the right thing to protect those we may injure or cause damage.

In Arizona property damage minimum is $10,000 and bodily injury is $15,000. And in my opinion these numbers are woefully low as well. It would do our state good to increase these minimums.