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Pay-as-you-drive car insurance
The insurance industry is steadily involving as new technologies allow insurers to better assess their risks and offer a more personalized approach to their customers. One of the signs that car insurance is looking up to new trends is the introduction of pay-as-you-drive insurance policies by several companies simultaneously. First introduced in the UK, this new type of insurance has proven to be very flexible and attractive, especially for customers who don't use their vehicles all that often. At the same time, some groups of car owners have expressed concern with this new insurance type, claiming that it violates their privacy. In order to understand why some car owners are happy with pay-as-you-drive car insurance while others are against it you first have to understand the principles it is based on.
Usage-based (another name for pay-as-you-drive) car insurance is a bit different from the traditional policies in its very essence. Instead of dealing with possible future claims and assessing (sometimes erroneously) the risks associated with every particular driver judging by the age, sex, education or job group he or she makes part of, usage-based coverage only deals with hard facts and takes the particular driver's behavior on the road into account when calculating premiums. After all, it's more important how the customer uses the car while in traffic rather than what credit rating they have or whether or not they've graduated from college. By studying the overall distance driven per period of time and analyzing the driving patterns in real-time it is much easier to assess the risk of insuring a particular customer. But how can you do that in the first place? Well, that's where modern-day technologies step in and what seems to concern some car owners.
Pay-as-you-drive car insurance is based on vehicle tracking, usually employing the GPS system, which is factory-installed in the majority of modern-day vehicles. And even if you don't have one, some insurers will install a separate device that will serve the same purpose - tracking your movements and driving patterns to determine how risky your behavior is on the road. You can easily see why some drivers aren't very happy with this new policy type, since they view it as an invasion of their privacy. Some people argue that insurance companies will provide the information on your movements to any affiliated parties or the authorities and that's just the start of the global control system. Insurance companies, on the other hand, try to assure that this is not a part of the Big Brother and they don't disclose the information to anyone, using it only for internal purposes and focusing solely on the driving patterns rather than the vehicle's accurate location. Still, it's hard to deny the fact that the technology allows to track down any vehicle without any effort. However, seeing the popularity of security systemsthat are based on the same principle of tracking, it's really hard to deny the possible benefits of constant tracking.
Of course, usage-based insurance is purely an option these days and it's unlikely that it will become compulsory anytime soon. Moreover, for some drivers it just may be not as economically attractive as traditional car insurance. If you spend too much time driving around and aren't particularly defensive in your driving style usage-based insurance may turn out to be too expensive to deal with. At the same time, it may be very attractive for drivers with low yearly mileage and responsible driving behavior. So it is very likely that we will see more car insurance companies offering this new service in the coming years as the demand for it will certainly increase.