Car Insurance Companies May Start Associating Greater Risks and Higher Rates for Certain Routes
What if your travel destinations impacted your insurance rates? Your driving habits influence how much you pay each month, but according to a report from USA TODAY, three insurers have already filed patents for route-based risk programs.
So far, Allstate, State Farm and Travelers have proposed to examine the routes drivers regularly take and assign values based on several factors, including:
- Accident patterns
- Weather conditions
- Geographic facets
- The route the driver checks on his or her smartphone
Route-based risk programs could be specifically priced so that rates increase for:
- Certain intersections
- Routes with police activity
- Time of day
- Length of your trip
- Insurance losses
- Driving habits (i.e. tailgating)
With these factors taken into consideration, the riskier the routes you take, the higher premiums you could pay. For insurance companies, expanding coverage to this area may encourage risk reduction.
But, what will the insurer charge and how will it be calculated? Right now, the pricing strategy is up in the air. As one option, instead of requiring a 6- to 12-month policy with a flat monthly rate, the insurer may opt for units, which can be spent however you see fit. Or, if you regularly pass through certain questionable routes or intersections, you may face a surcharge.
Although this concept may prove to be an annoyance, it could benefit certain drivers: specifically, those who regularly take shorter trips or safer routes. With unit-based pricing, these drivers could start with a low cost and stretch it out over a longer period. Thus, for a choice of policies, the insurer may offer a standard monthly premium or unit-based pricing.
However, at this point insurance companies still have to gather more information about routes before they start assigning them a dollar value.
If you’ve seen your rates change and you’d like to opt for different coverage, see what Ion Insurance has to offer. To learn more, give us a call at 203.439.2815.
