When working with a tight budget, finding every penny hidden in those costs is essential. Is your auto insurance taking up too much of your budget? If so, usage-based auto insurance may be a solution to your problem. Here, you'll learn what it is, how it works, and the advantages of opting for this type of policy.
What Is Usage-Based Auto Insurance?
This type of auto insurance policy isn't like a standard policy in the sense that the premium that you pay is based on the miles that you drive. The company will send, or install a small plug-in device under the dashboard in your vehicle. They can then track the mileage and generate a premium rate for you.
How Is the Premium Calculated?
Mileage is only one element that they consider as the rate is calculated. Other elements include:
- Type of vehicle
- Your driving record
- Your credit score
Additional information may be collected from the device to provide the insurance provider with knowledge of your driving habits. Things like:
- Speed
- Quick stops and starts
- Where you're driving
Each of these elements is considered. So, the safer driver you are and the lower the number of miles you drive, the lower your premium payments will be.
What Is the Advantage of Opting for Usage-Based Auto Insurance?
This type of policy is really only beneficial to those who don't drive their car often. Maybe, you have a second vehicle that you only take out on special occasions. The low miles driven would most likely qualify you for a lower-costing policy.
If you do begin driving more often, contact your insurance provider immediately to find out if upgrading your policy to a more traditional plan would be beneficial for you.
Can Anyone Get Usage-Based Auto Insurance?
Unfortunately, this type of policy is not available in every state in the US just yet. This is because of the privacy debate surrounding the collection and use of the data from the plug-in device. A quick web search or call to your insurance agent will clear up any confusion as to whether this type of policy is available in your state.
There are ways to cut costs on auto insurance. This is just one type of policy that could help you accomplish that task. Talk with your agent to learn more about money-saving tactics that could help stretch your monthly budget a little further.
For more info about auto coverage, contact a local company.
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