Cheap Auto Insurance And Pay-as-you-drive
When you come right down to basics, insurance is a very simple bet
. You pay a premium and, if you manage to drive safely, you're a winner. But, if you're involved in an accident, you can claim on the policy and you're not a loser. Well, perhaps that should be you don't lose as much as you might have done without insurance. From the insurance company's point of view, it guesses how much it's likely to have to pay out and adds a profit margin. If its guess is right, this is a profitable business. As you may have noticed, insurance is a profitable business so these companies are very good at guessing how much money all us drivers are likely to claim in any given year. For a long time, it's been obvious people who only drive a few miles a week have a much lower risk profile. They don't get into accidents as often as the folk who drive long commuting distances on busy roads. The low-mileage drivers should pay less. That's only fair. Why should the stay-home drivers subsidize the more wide-ranging? But the problem for the insurance companies has always been our habit of dishonesty. Let's say an insurer offers lower rates to those saying they drive less than 100 miles a week. Suddenly, we all say we never take the vehicle out of the garage except on a Tuesday to go visit Grandma. Now the insurers have an answer. It's the appliance of science.
The first point is this has nothing to do with the event data recorders all manufacturers are now fitting to our vehicles. That's an entirely separate use of technology to put the equivalent of an airplane black box in everyone's vehicle. This allows the National Highway Traffic Safety Administration and other interested parties to investigate the causes of accidents and, for the most part, decide how to design vehicles to be more safe. Now the larger insurers like Allstate and State Farm are providing their own black boxes or relying on the onboard computer systems to monitor when and how far we drive. Interestingly, State Farm also includes a GPS transmitter to show where its policyholders drive. Many people are suggesting this is a modern version of Big Brother, a spy in the vehicle with us.
When asked why it was fitting a GPS transponder, State Farm explained it was intended to track a stolen vehicle and to send a tow truck should its drivers break down or get involved in an accident. That said, it also acknowledged the package might not be for everyone. Manufacturers did not fit the right type of ports before 1996 so black boxes cannot be fitted to older vehicles. Those who feel the monitoring systems infringe their privacy will also refuse this cover. But, with those who are prepared to allow detailed monitoring of their driving, the discounts can be significant. So it's a trade-off between privacy concerns and cheap auto insurance. In some of the more sophisticated packages, the system records whether you make sudden stops. This increases the risk another vehicle will hit your rear-end. This evidence can show an increased risk and end your hopes of cheap auto insurance. Always find out what the black box records before signing up.
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