Mention the term usage-based auto insurance policies and you’re likely to get confused looks, anger, or joyful responses depending on who you talk to. The controversy revolves around how driver’s driving behaviour would be tracked and how that information might be used against them at some future time.
We all speed and slam the brakes on once in a while and we don’t want our insurance to rise because of that.
With GPS technology so widely used and available, it stands to reason that an installed electronic device could be used to track an automobile’s travels. It can track with astonishing detail. A car’s speed, location, trip frequency, and mileage can be recorded. It’s used on many fleets and it tends to make drivers feel like machines, constantly monitored.
Those who don’t drive often or very far would seemingly be happy about usage-based auto insurance. If you don’t drive very often or far, why should you pay full rates? Insurance companies would discover whether such occasional drivers really do drive safely and incur fewer accidents. Estimated savings on these policies is only running about 10% to 20% so that isn’t really translating to the savings people might expect.
Those who commute long distances to congested urban areas would likely see their rates rise. If your insurance company could see that you’re a speeding, erratic, and aggressive driver, with plenty of tickets and demerit points, would they want to continue insuring you?
Well, this is the controversy about usage based auto insurance. If your driving is more about your auto insurance than driving, then we’re going to get into some trouble.
“The Personal Data Will Never be Leaked or Used Against You”
In a recent interview, a top rep from a major Canadian insurance firm stated that the information collected by the electronic device and streamed to their head office computers would never be used against drivers.
If GPS tracking is only about tracking mileage and frequency, then is it really unnecessary. It’s easy to see how some people would assume that insurers would use this as leverage to charge most drivers more for insurance. Are there disreputable insurers in this industry?
What if the driver exceeds speed limits on highway 407 or makes frequent sudden stops in crowded Downtown Toronto, or makes quick tight turns in a mall parking lot? Will the insurance company’s computer interpret their driving behaviour correctly?
Most driver distances can be forecast simply by where they live and must go to work. That’s where most of the risk is. The details are largely unnecessary.
Let us know what you think of usage-based auto insurance? We’d like to know.