Car Insurers Looking at Premiums Based on the Hazards of Your Drive

This month, we published a series of articles looking at car insurance and some of the ways an insurance company can penalize you after a wreck.

Buying insurance has always been something of a lottery. If you skimp on car insurance, you could find yourself with inadequate coverage after a crash.

Recently, an article in USA Today revealed how insurers are looking at new factors to calculate payments such as how risky the routes you regularly drive on are.

Insurers can’t monitor your driving around the clock. At present, they use predictive factors like how many accidents you have had and your age. If you are younger, your premiums are likely to be higher because you are seen as less experienced.

Allstate tries new insurance options

However, some insurers have now drawn up plans for analyzing risk that may transform how they will eventually charge for auto insurance.

USA Today noted Allstate recently filed a patent application for a new pricing system. It would charge customers based on the riskiness of each trip. The article noted similar systems are being considered by Travelers and  State Farm Insurance.

It sounds far-fetched, but modern tracking technology means insurance companies could customize drivers’ by working out a range of factors like the roads they drive on the most, weather conditions and the number of passengers they carry.

By using less dangerous roads, drivers could reduce their insurance rates.

The technology is certainly embryonic, but these moves give us an indication of how insurance companies are considering the future of auto insurance.

At present,  drivers give little thought to how hazardous the roads they are traveling on is. Under a system of trip-based insurance, that would change.

Allstate’s system would allocate “risk values” to various stretches of highway based on information such as accident rates, dangerous geography, and frequent weather conditions. For instance, a high road that often freezes over in the winter might be judged safer than a road with less extreme weather.

The goal of Allstate’s patient is to “promote and reward risk mitigation” among its customers. You could end up planning trips based on how much you’re willing to spend. The new approach would see a move away from six or 12-month policies in favor of buying “risk units” before you drive.

Another possibility is insurers will still sell more traditional policies but would offer trip-based policies to incentivize better driving. Insurers could give discounts to customers who consistently choose safe routes.

As Virginia personal injury lawyers we are well aware that the insurance companies will seek to save money in whatever they do and there are clearly many questions about this new approach. Read our recent blog about insurance company tricks here. If you or a loved one has been hurt in a car crash, please call us at (757) 455-0077.

Griff O'Hanlon

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