Budget Concerns: How Much Insurance is Enough?

Budget Concerns: How Much Insurance is Enough?

Why These Drivers Should Think Twice Before Buying Usage-Based Auto Insurance

Dustin Duncan

Usage-based auto insurance is often touted as a novel solution to high insurance rates. Like so many things in the insurance industry, however, it isn't a one-fit solution for all drivers. Here are three types of motorists who may not benefit from usage-based coverage:

Frequent Drivers

The main benefit of usage-based insurance is that it rewards infrequent drivers. This is based on the premise that the more you are on the road, the more likely you are to experience or cause an accident. Insurers have different definitions of low mileage; for example, the limits range from 7,500 miles to 15,000 miles.

It follows that you won't benefit much from a usage-based insurance program if you are a constant driver who drives thousands of miles every year. In that case, you are better off sticking to your conventional insurance coverage, at least as far as the rates are concerned.

Aggressive Drivers

Telematic devices (the systems used to collect and transmit data in usage-based insurance programs) don't just focus on mileage; some also collect other data such as speed, acceleration, braking, when you drive (time of day), and other driving-related data. These are some of the parameters insurers use to classify drivers as aggressive or non-aggressive. You are likely to benefit from the program if your driving data reveals that you are non-aggressive. Therefore, if you are one of those drivers who like to break hard, accelerate fast, or drive long distances at night, think twice before signing up for usage-based insurance.

Drivers Who Are Super-sensitive about Privacy

Telematic devices have to gather data about you for them to work. The data is transmitted to the insurers who use it to determine how much you should pay. Here is some of the information your carrier is likely to have when you opt for usage-based coverage:

  • How much you drive
  • Where you drive
  • When you drive

A skilled data analyst can use this data to get considerable information on your life. There is no evidence that insurers use this data in less-than-honorable ways. However, there are just those who don't want the corporation to have such data about them. If you are one of those people are concerned about what the insurers can do with the information, then you aren't a perfect candidate for usage-based coverage.

Therefore, analyze your driving habits carefully before buying into usage-based auto coverage. Continue using traditional forms of coverage if your analysis reveals that you can't benefit from usage-based insurance. Talk to an insurance agent, such as those at Clifford P Beauvais Insurance Agency, about other ways of cutting your auto insurance costs.


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About Me
Budget Concerns: How Much Insurance is Enough?

Insurance is something that I carry in the hopes that it never has to be used. Along with life coverage, I also have low cost auto insurance and a health plan through my employer. I'm toying with the idea of adding some additional coverage, just in case something happens and I'm no longer around to take care of my family. The question that is on my mind is how much insurance is enough? Do I really need more, or would it be better to cultivate other assets that my loved ones can draw on if needed? If you are in the same boat, let's journey together for a while. Read on and I'll explain what I'm trying and why. Together, we can figure out when it is time to add more coverage and when enough really is enough.