What's Stopping People From Getting Usage-Based Car Insurance?
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Usage-based car insurance (UBI) has reached the mainstream. All the large providers have their own telematics programs, using everything from phone apps to software installed by automakers right into their vehicles.
But not everyone is signing up. Despite the discounts available to users, a recent survey shows that only 11% of drivers with smartphones have downloaded their insurer’s app. Out of that number, only 9% regularly use it.
Age, demographics, privacy concerns, misunderstanding about the technology, and contentment with existing coverage all played a role in whether people were likely to download and engage with UBI apps.
What does the survey tell us about the future of car insurance?
Standard & Poor’s Global Market Intelligence, a New York-based research institute, conducted their survey online in July, surveying over 1,000 drivers, according to Insurance Journal. The results showed age as a primary indicator of whether people used insurance discount apps.
Over 15% of respondents from younger generations said they used their insurance provider’s app, while adoption reached only 8% amongst respondents born in 1980 or earlier.
Household income also made a big impact on the data. 21% of those who made $125,000 to $249,000 a year showed interest, while only 11% of those who made $25,000 to just under $50,000 said they felt the same way.
Yet growth of the product is still likely, as about 35% of those surveyed said they would be somewhat or very interested in using an app to save on car insurance.
How exactly does a usage-based mobile app work?
As car insurance trends away from using biased data like credit scores and demographics to determine rates, insurance companies are developing fairer, usage-based programs using telematics.
Telematics refers to the transmission of information over long distances—like phone calls, radio, and the Internet.
Most providers use smartphone apps to collect data about a driver’s habits like how much you drive, how hard you brake, and how often you check your phone while behind the wheel. Then, they set your rates or offer discounts based on the collected info.
Usage-based programs might help curb unfair insurance practices, but they aren’t necessarily the cheapest option for everyone. The less people drive, the more they tend to save through them. The accuracy of the mobile apps differs from company to company as well.
Other ways to save on car insurance
Downloading a UBI app is only one of the many ways to save on car insurance. Improving your driving habits and your credit score will bring insurance costs down, but these aren’t easy things to do, and it can take a long time before they make a difference.
If you’re looking for faster, easier ways to find cheap car insurance, shopping around for the best rate with Jerry will leave an average of $879 in your pocket every year.
A licensed broker, Jerry does all the hard work of finding the cheapest quotes from the top name-brand insurance companies and buying new car insurance. Jerry will even help you cancel your old policy.
And to ensure you always have the lowest rate, Jerry will send you new quotes every time your policy comes up for renewal, so you’re always getting the coverage you want at the best price. This level of service is why Jerry earned a 4.6/5 rating on the App Store and made it the top insurance app in the country.