Car insurance premiums seem to increase every year as do the number of drivers looking for ways to reduce the cost of those premiums.

Answering this call, many auto insurance companies are getting creative with how they calculate rates in an attempt to lower premiums for drivers that qualify.

One such method is usage-based automobile insurance, which bases rates on the actual usage of the vehicle to reward safer drivers with lower premiums.

What Is Usage-Based Car Insurance?

Usage-based car insurance policies are those in which the premiums are calculated based on one of two factors: either how safe the driver is or how many miles are actually driven.

Since these methods of calculating auto insurance premiums rely on factors other than age, type of vehicle, credit history, where the driver lives, and other unrelated statistics, some find savings with usage-based policies.

Also called a “pay how you drive” or “pay by the mile” policy, these options may not be helpful for everyone but are worth at least looking into for certain drivers.

How Does Usage-Based Car Insurance Work?

Usage-based automobile insurance works by tracking driver actions and reactions in real-time as opposed to the usual method of estimating how a driver is expected to drive based on statistics and driver groups, then using that information to calculate car insurance premiums.

Tracking such information is accomplished by installing a recording device into the car or by using a phone app.

For mileage-based policies, the app or device records how many miles are driven in a given time period.

For policies calculated based on safe driving habits, it records speed, acceleration and braking habits, when and where the person drives, and other details.

Does Usage-Based Auto Insurance Actually Save Money?

Usage-based auto insurance can definitely save some drivers money depending on their driving habits.

A mileage-based policy is most beneficial for those who don’t drive very much, as these drivers are at much less risk of being involved in an accident.

Mileage-based car insurance policies charge by the mile and are especially advantageous for people who work from home or have very short work commutes and don’t do much other driving.

Some policies have a limit to the number of miles that can be driven in a time period before additional fees apply.

Safety-based automobile insurance policies are beneficial for those very careful drivers who obey traffic laws, don’t display aggressive or dangerous driving habits, and avoid driving in dangerous areas.

This policy is calculated based on the driver’s actual habits during a determined policy period; naturally, the safer the driver and their driving habits, the lower their rate will be.

It creates a good incentive for drivers to be more careful.

A Benefit For Safe and Infrequent Drivers

Reducing car insurance coverage as a way to save money is never a good idea.

To combat a driver’s tendency to do this in an attempt to reduce insurance premiums, many insurance companies offer various types of usage-based policies that can provide great savings to certain drivers.

Unlike the safe driving discounts that many auto insurance providers offer, these policies reward the reduced risk of good driving and low mileage with lower premiums.

Want Usage-Based Car Insurance in College Station Texas?

Talk to the Auto Insurance Pros at Jones & Associates Today!

Call (979) 599-7532 For More Information!