Most people go out and get an auto insurance policy, find the best price, and go on with their lives happy with their coverage. However, there is one form of auto insurance that many car owners never really talk about or pay attention to: usage-based auto insurance. If this phrase is new to you, you are not alone; many people have no idea that you can even get an insurance policy that is purely based on how or when you drive your vehicle. Here is a look at a few things you should know to help you decide if usage-based auto insurance plans are the right choice for you:
Usage-based auto insurance involves installing a device in your car.
To track your driving habits and get a usage-based insurance plan, you will be given a device to install in your vehicle. This simple device is a telematics device, which uses cell towers and mobile data to transmit information back to the insurance company. The device usually plugs into the Onboard Diagnostic Port (OBD-II port), which is a small part that can typically be found just under the steering wheel or near the base of the dash. This is the same plug-in port that is used if your mechanic needs to gather information about error codes the vehicle is giving when something is wrong.
Usage-based rates are complex but easy to understand.
The rate you are given will be initially set by the information that you supply when you ask for a quote. However, this rate is only a basic estimate until the telematics device has time to record your driving behavior over a span of time, which is usually about a month. The device will monitor the following information:
- Where you usually travel and how far you drive in a given time period
- How often you brake suddenly or make sudden changes in your route
- What average rate of speed you travel
There are several other bits of data that are collected to give the insurer an idea of how your vehicle is used, but the basics are easy to understand.
Usage-based rates can save you a lot of money on auto insurance.
If you are a responsible driver and you barely travel a few miles every day, you may still be charged the same rate as someone who is a high risk just because of certain factors like your age. Usage-based auto insurance plans monitor you and your driving habits, so those pesky risk factors that often drive up rates are no longer something to be assumed.
Reach out to your local auto insurance agent for more information about automobile insurance plans.
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