The Royal Crest Agency Insurance Tip of the Month
May 2012

Have you ever thought “I’m a good driver, why can’t I be rewarded for my good driving habits?” Perhaps you have pondered “Is there ever going to be a day that I am rated as an individual not just a statistic for my auto insurance rates?” Or “All I do is drive to work and back home, why should I pay as much as a person who drives more?” As technology improves and the auto insurance market evolves, you will find that “Usage Based Auto Insurance” is the future of insurance.

What is Usage Based Auto Insurance?
Usage Based Auto Insurance is based upon different factors among the carriers. In its simplest form, a driver’s premium is determined by the number of miles they drive on a specified vehicle. Usage Based Insurance rates an insured driver based on their individual driving habits. This gives drivers motivation to drive less and develop safer driving habits. Higher risk drivers will pay more and safer drivers will pay less.

How does the insurance company know how I drive?
The insurance company provides the driver with a device that plugs into their vehicle and determines how the vehicle is driven during specified time periods or policy term. Carriers such as Progressive, utilize a device called “The Snapshot” which plugs into an ODB (Onboard Diagnostic) port of a vehicle 1996 or newer. This device will accumulate data based on driver habits for a 6 month policy period. It only tracks information in three areas. They are: how many miles are driven, the times of day they drive, and how hard they brake the vehicle. It is important to know that this system does not follow you as a GPS or tracking device and “Big Brother” is not watching you. At the end of the 6 months a driver can receive a discount of up to 30% off their policy premium based upon how safe they drive. As technology advances, you may see Usage Based Auto Insurance becoming more standard in the near future.

If you are interested in establishing a Usage Based Auto Insurance program, give us a call! We have the training, the carrier, the technology and the expertise to design this type of program for you.