Should You Switch to Usage-Based Auto Insurance?

If you find yourself driving less because of the pandemic or a change in lifestyle, you may be wondering if you can get usage-based auto insurance to fit your new driving needs. Usage-based insurance programs base your insurance rate on your driving and can provide a discount if you are a safe driver and drive fewer miles per year. But before you decide to switch, here is what you need to know.

 

What is usage-based insurance?

Usage-based car insurance programs, also commonly called pay-per-mile insurance or pay-as-you-go insurance, are growing forms of car insurance in the United States. In essence, it allows drivers to receive car insurance rates based on their individual driving statistics. This information is based on the telematic analysis of each driver. Each driver will receive a personalized insurance rate based on their own driving, factoring in their type of road used (freeway or urban), braking, and cornering. This usage-based auto insurance often enables drivers to save money both on base rates and through discounts.

 

How does usage-based insurance work?
Pay-per-mile insurance, or usage-based car insurance, works as you may expect. A driver uses an app or inserts a telematics device into their vehicle that will track their driving habits and mileage driven each day, week, and moth. This information is then fed back to the insurance agency to analyze. Your auto insurance rate will be generated based on this information.

 

Most insurance agencies will charge a very low base rate and then have a per mile fee. The per mile fee is usually cents. However, the amount can change based on the coverage you want for your vehicle and some other demographic questions.

 

Should I get usage-based auto insurance?
Think about these factors before deciding to switch policies.

  • Consider your driving habits. The insurance agency will know how you drive when opting for a usage-based policy. If you’re a safe driver, you may not have anything to worry about. You may even be able to save money on your premiums. However, if you have a tendency to drive at night (as many insurance companies consider daytime driving to be safer), you may not save much money, or any money at all.
  • Consider if you are comfortable with data collection. You may be able to secure cheaper auto insurance, but it does mean that the insurer will have a clear view of your driving habits. If you are uncomfortable with an agency knowing this private information, then this policy may not be right for you. If you choose to sign up for a usage-based program, make sure you know exactly what the plan monitors and who the company shares the data with.

 

Usage-based auto insurance can benefit a lot of drivers on the road, especially if they find themselves driving fewer miles this year than last. If you are unsure of whether you could benefit from this coverage, be sure to talk to your agent to learn more.

 

Ensure you have the right auto insurance in place. Visit the professionals at McCarty Insurance to get started on your tailored coverage. We can help you understand the ins and outs of your chosen policy.

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