Are you a disgruntled car insurance customer? Are you tired of paying big bucks for coverage even though you’re a low mileage, safe driver?
If so, you’ll be happy to know you might soon be able to choose a new insurance option that can reduce your premiums.
The option, known as mileage based, usage based, or mileage verification insurance, is being tested by several US insurance companies in various states, with one company already announcing a plan to adopt the system nationwide.
Here’s how it works.
When you sign up, your vehicle will be outfitted with a monitoring device. The device’s function is to send information about your driving habits to your insurance company. It records, among other things, sudden stops, speed, miles driven, daytime, nighttime and peak hour use.
The idea is the same as power company demand management or time-of-day billing programs, which offer reduced utility rates when you agree to use electricity only at selected times. In the case of your vehicle, if you do most of your driving during non-peak hours, your insurance premium could be recalculated to a lower rate.
That’s a good thing, right? Perhaps—or perhaps not.
While insurers have an eye on the bottom line—they hope the new option will ease gridlock, decrease roadway accidents and reduce pollution—consumer advocates worry about yet another privacy invasion.
The mileage based option is voluntary, so the decision is yours. And since states are still working on regulations, you have time to put a few more unmonitored miles on your car before making up your mind.