This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

The Rise Of Usage-based Auto Insurance

Auto insurance companies would really like to know how well you drive on a daily basis. Usage-based insurance (UBI) products let them monitor your driving in exchange for offering you potentially lower rates.

The tracking devices typically used for UBI policies tell them when you go out, how far you drive, how much and how hard you brake, and how rapidly you accelerate.

If you agree to use such devices, you could be eligible for discounts of up to 30 percent on your car insurance rates.

Currently, about 1 percent of drivers benefit from some form of UBI, says Bob Mathe, president of Evogi, which designs and engineers telematics solutions for insurers. In five years, that number could be as high as 20 percent, predicts Mathe. By 2020, it could be as high as 30 percent.

In fact, insurers that have just begun thinking about telematics-based pricing are way behind, says Mark Hill, senior manager of Deloitte Consulting.

Not only are they behind, but they also run the risk of losing their customers to early adopters that are rewarding their policyholders for safe driving, says, Stephen Packard, director of Deloitte Consulting.

Drivers willingly participate

Drivers don't seem to mind giving up their personal information as much as you might expect. "Many consumers feel the discounts more than offset the loss of privacy," Packard says.

In recent surveys, Towers Watson, global professional services company, found that more than 80 percent of drivers are willing to install tracking devices for the benefit of a discount, says director Robin Harbage.

It could be that in today's world, people are used to relinquishing their privacy, Mathe says. Many smartphones today gather and store all of the same information kept by telematics devices installed in a car, he says.

Between Facebook and location-based social apps like FourSquare, "more and more people are sharing their intimate information all the time," Harbage says. And they think nothing of it.

No device, no insurance?

Could there come a day when auto insurers require you to have a telematics tracking device in your car?

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG

Markets

Chart of I:DJI
DOW 16,351.38 +293.03 1.82%
S&P 500 1,948.86 +35.01 1.83%
NASDAQ 4,749.9790 +113.8740 2.46%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs