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Law Office of Cohen & Jaffe, LLP

Usage-Based Insurance: A Model with Far-Reaching Implications

An instant discount from your automobile insurance provider may sound too good to be true, but many of the leading carriers of car liability coverage are offering steep discounts for the privilege of watching how drivers operate their vehicle. With the ultimate goal of working to lower claims, insurance providers are collecting thousands of pages of data on how drivers operate their vehicles.

Currently, usage-based insurance programs are voluntary. Those who accept the program terms are given a tracking device to place under the steering column in their car in exchange for a hefty discount if their driving scores are positive. For good drivers seeking a discount on annual premiums, this seems like a no-brainer. But, how much information do you feel comfortable sharing with your insurance provider?

Usage-Based Insurance Programs Could Change the System

Insurance providers began moving to this new methodology because statistics show usage-based insurance programs attract safer drivers with exemplary driving histories. The data-collection devices, which are outfitted to cars in these programs, record every moment of driving time conducted in the vehicle. In return, drivers receive a discount that is based more on how they drive and less on traditional information like credit history, gender, and age category.

Programs like these could be particularly attractive to younger drivers who are frequently assessed higher insurance fees based on actuary models of greater crash frequency in drivers below 25. The opportunity to pay lower premiums by proving that you are a better driver is enticing.

Modern vehicles are information portals that provide data about where drivers have been and traveled most often. Sharing information with auto manufacturers was an easy transition for many drivers. Programs like OnStar proved that offering an irresistible benefit can persuade the public to ignore their privacy concerns. Automotive satellite tracking programs are an omnipresent assistant that is capable of unlocking your car, providing directions, and calling accident assistance in the event of an emergency, and these features make drivers feel safer.

So, is the insurance industry providing usage-based insurance services to better understand how people drive with the ultimate goal of making driving less dangerous?

Watchdog groups don’t think so, and they suggest that these new automotive tracking programs aren’t as benevolent as they appear. They are asking pertinent questions about how this collected data will be used in the future, and if it will be stored for purposes other than observation.

Insurance providers may be the industry that is most committed to curbing auto crashes and fatal injury from vehicle collisions. Providers pay damages in the event of a crash regardless of injury, fault or circumstance. Safe drivers stand to benefit the most from the betterment of other operators, and when those behind the wheel commit to better driving practices, roadways become safer. If being monitored by an insurance provider is the best way to achieve this goal, the public must decide if it’s worth the tradeoffs.

Usage-Based Insurance and Motor Vehicle Accident Implications

As more information is gathered through usage-based insurance programs, experts predict clearinghouses will be formed to store the information for expanded use. Much in the way credit habits are documented, industry specialists forecast a new insurance model with documented driving habits on the horizon.

Driving habits also have legal applications. Driving data could be entered into evidence in motor vehicle accident cases to determine fault and liability. The new vehicle insurance reality may be further in the future than insurers would like because they need more drivers to agree to be watched. As more drivers sign up for these programs, a new standard measurement of insurability could be created. Only the market will determine how many drivers feel the positives outweigh the potential negatives.

Decreasing the number of motor vehicle accidents can’t be accomplished by following the driving habits of only the safest drivers. Data collection that features the driving habits of every category of vehicle operator would need to be studied before making comprehensive changes to the current system. Insurance providers are hoping that premium discounts will be a desirable enough lure to attract more drivers to usage-based insurance programs.

If you or a family member has been involved in a motor vehicle accident and you are struggling to find clarity, then please contact the attorneys at Law Office of Cohen & Jaffe, LLP, in Long Island, New York. We work with clients to determine which legal support and solutions could assist you in your time of need.

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