Pay-As-You-Drive Insurance Growing Despite Privacy Concerns
Usage-based insurance could save drivers 5% to 35%
The survey found that more than one in three insured drivers would switch from a traditional monthly premium-based insurance plan, to one based on when and how a vehicle is driven if it gave them a ten-percent or better discount, The Detroit News reported.
On average, drivers with usage-based insurance see a savings of between five-percent and 35-percent. It may not seem like much, but the average car insurance premium rose 35-percent from 2012 to 2013, according to J.D. Power and Associates.
Usage-based insurance works by accurately recording a vehicle's odometer and tracking its location via GPS. This allows insurance companies to better calculate the risk level for each driver by learning their individual driving habits, often saving them money. Currently, insurance companies base rates on aggregated statistics and past driving records.
Besides drivers suddenly seeing penalties in their premiums for late night snack runs or trips to rougher parts of town, there's the matter of privacy. There are no laws or guidelines established regulating the usage or release of such information. Basically, once your driving habits are recorded, there isn't much there to stop them from getting out. But, hey, at least you'll have a little extra cash in your pocket.
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