Usage Based Insurance – 5 Reasons Why it is Considered Better
In the recent times, usage based insurance has become quite common in the market. In this form of auto insurance, the driving data of the policy holders are reported with the help of telematics devices to the insurance carriers so that the premium amount can be adjusted properly. Earlier, a very few companies use to offer this kind of insurance coverage but the scenario has changed in the recent times. Now, many insurance companies are offering this option which has led to a competitive atmosphere. There are certain advantages of this option which has made it popular.
Why usage based insurance is a better option?
Here are some of the reasons why usage based insurance is considered as a better option. Let’s take a look:
1. Built-in connectivity: Earlier, one of the major disadvantages of the usage based insurance was that it required a lot of on-board devices in order to track the car usage. The insurers need to conceive, develop, test as well as get approved for these devices. Not only that, they had to mass produce that device and fit it in the car. However, in the recent times, things have changed. A large number of cars now have build-in connectivity which has reduced the need for such on-board devices. Moreover, with the coming up of smarphones, things have become further easier.
2. Consumers have become comfortable in sharing information: Earlier, a large number of consumers were not comfortable in sharing their driving data with the insurers. But the mind-set of consumers has changed now. They are willing to share more information which has in turn helped in popularizing the usage based insurance. Regulatory approval, privacy and security help in building a trusted brand of usage based insurance. If any insurer can provide all of these, then the consumers will surely be going for this insurance.
3.Vendors do the needed work: It is the vendors who take the needed steps in order to develop usage based insurance system. These vendors help in developing devices, analytics, security and collection as well as data transmission procedures. So, no extra effort is needed on the part of consumers in this regard. As no extra effort is needed, most consumers are willing to go for usage based insurance.
4.Big opportunities for the consumers: With the help of usage based insurance, the consumers may be able to get big opportunities from their insurance company. With the help of this coverage, a lot of data will be generated which will help the consumers to get different value-added services which may include roadside assistance, more tailored marketing messaging, etc. However, in order to provide the best benefits to the consumers, the insurance company should know how to analyze the data, predict loss, identify the value of the consumer, etc.
5.Natural evolution in respect to auto insurance: The onset of telematics data is compared with the onset of credit rating. The data received from here will help the insurance company to judge the consumers better. With developed technology and consumer acceptance, it has had the right impact on messaging, product and pricing.
So, these are main reasons why people have started considering usage based insurance as a better option compared to others.
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Category: Car Insurance
