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What Is A Usage-Based Insurance Plan?

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A lot of major insurance companies are offering a newer type of auto insurance policy type, which is called a usage-based insurance plan. The goal of enrolling in this type of plan is to save money on your auto insurance by proving you are a safe driver. If you are interested in this, here are three things to know.

It requires installing a device in your car

The first thing to understand is that a usage-based plan requires that you install a device in your car. This device is designed to track a variety of different things, and this will include the following activities:

  • The number of miles you drive each day
  • How fast you accelerate and use the brakes
  • How fast you drive
  • Where you drive to and the time of day you normally drive

This information is all recorded and can affect your auto insurance rates.

The effects the data can have on your auto insurance rates

As you begin using your car with the installed telecommunication device, your insurance company will monitor the results of your driving habits. If they find that you are a good, safe driver, it could lead to decreases in your policy premiums. If they find that you are not a safe driver, but are actually quite reckless, your policy premiums may go up.

Most insurance companies will adjust policy rates every six months or so based on the habits they see over the previous period of time. You may also receive a discount initially just for signing up for this. After that, you will be in control of whether your policy premiums increase or decrease as it will be based on your driving habits.

The results most drivers experience

In most cases, people who are on usage-based programs actually become safer drivers, simply because they know they are being watched and monitored. These drivers know that all their movements are being recorded and analyzed, and this is often the best type of incentive a person could have to help him or her driver safer. If you think about this concept, you may easily be able to see how having a device like this would make you drive more safely from now on.

If you are interested in finding out more about a usage-based auto insurance program, contact an insurance company like Reinard Insurance Agency Inc. This is not something that is available through all companies, but more and more companies are adding this to their list of products available.


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