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Car Insurance Innovations – The amount you pay depends on the risk the insurance company considers you to be. When assessing this risk, they consider several factors, including how you drive, who you are, and even how you manage your money.
As drivers rush into spring, taking a few minutes to think about their auto insurance can save them big money in the end. Not all insurance policies are created equal, and this leaves savvy shoppers with options to protect their coverage.
Car Insurance Innovations
Before you start saving, it’s important to understand what factors auto insurance companies consider when offering such an important price premium.
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The short answer is how much you pay depends on how much of a risk the insurance company considers you to be. When assessing this risk, they consider several factors, including what you drive, who you are, and even how you manage your money.
Insurers first look at your past to determine your risk. Specifically, they look for things that indicate you may be at risk in the future, such as accidents, speeding tickets, and speeding arrests.
Then they turn to statistical models, which usually start with demographics. Younger and less experienced drivers are more likely to get into an accident than older and smarter drivers. Women take fewer risks when driving, and when you’re married, you take fewer risks still.
But what they ignore is demographic information that reveals race, ethnicity, religion, national origin, or other potentially discriminatory factors. If you believe a company is discriminatory, contact your state insurance commission.
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Some insurance companies also look at your credit score as a proxy for your risk. Chances are, if you live abroad and regularly miss credit card payments, insurers will assume you’re living abroad and driving.
To get a more detailed picture of your risk, insurers are encouraging customers to sign up for telematics programs that track your driving habits using a sensor on your car’s diagnostic port or an app on your phone.
Almost every insurance company offers a usage-based policy that tracks your driving—how much you drive in a given week, how often you hit the brakes or gas, or even the time of day you drive.
Some devices offer real-time feedback, such as beeping if you apply too much pressure on the brakes. Most of them have a display where you can see your progress towards a potential discount of up to 30%.
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One of the disadvantages of telematics devices is that they do not distinguish between applying the brakes to prevent a child from running into the street and normal dangerous driving.
App-based software collects more information about you, including your location and driving habits. If you pick up your phone while driving, it will alert you.
Any monitoring raises privacy concerns. Many people do not want to be searched, and others do not believe that the way information is collected will be limited. Some people are also worried about data leakage.
In California, there is an anonymous version of the telematics software for Tesla drivers. Through Tesla’s insurance program, on-board computers track Tesla drivers and report their behavior to Tesla’s insurance company, which uses the information to calculate discounts.
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This can be welcome news, as electric cars as a class are more expensive to insure than gas cars. With fewer EVs on the road, market forces are unlikely to make them available for crash repair.
Electric vehicle parts are usually not available from aftermarket suppliers, and mechanics who know how to install them work at specialist shops.
There are questions about how batteries perform after an accident and whether they pose a fire hazard.
However, as more EVs hit the market, market forces will make parts more readily available and skilled mechanics will use them.
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And with all things auto insurance, lower costs mean lower risk, and lower risk means lower premiums.
The new scheme from Wrisk (our insurance topic at BMW Innovation Lab UK 2016 and BMW Collaboration Lab US 2018) and the RAC will allow customers to pay for the miles they drive. unlike traditional auto insurance, drivers are paid based on trip estimates without offering reimbursement for short-distance trips.
The mobile-based insurance option offers users a more flexible solution that can be changed or canceled at any time, while Pay by Mile pricing tracks journeys in real-time and offers rates that reflect usage.
To meet the preferences of drivers who drive less than 6,000,000 kilometers per year, the platform takes into account the monthly actual route combined with other signals such as destination, travel time, weather that users can share. .
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After paying a one-time activation fee, users of the new Pay by Mile insurance scheme pay a premium divided into two parts:
Customers receive a cover that needs to be fitted to the windscreen and paired with a smartphone, and the policy can be purchased securely online or via the Pay by Mile app.
Risk’s new partnership with the RAC is the latest in a series of high-profile collaborations. Two years after joining the BMW UK program in 2016, Wrisk extended its partnership with BMW Group Financial Services (BMW Group) to provide three months of free car insurance for all new Minis sold in the UK.
The third program of the BMW Innovation Lab UK was launched earlier this year and six startups presented their solutions during a virtual Demo Day on 14 April. BMW plans to continue cooperation with the software teams.
Webinar: Learn From The Disruptors
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