Insurance for your car is as important as your health insurance because your vehicle also needs a safety shield. It protects your vehicle against incidents like accidents, theft, or damages. You might be aware of the conventional way of car insurance. But here, we provide you with information about usage-based car insurance and its benefits.
The very first question that arises in your mind is, “What is usage-based car insurance?” User-based insurance or UBI combines the expertise from telecommunication and informatics sectors to serve the auto industry. The traditional car insurance policy’s premium is based on the car’s model and not the driving abilities. So even if you use your vehicle less frequently and have good driving skills, you have to pay a particular premium according to the standard calculation.
Whereas, UBI is a new concept in the Indian car insurance segment that usually collects the available information from the vehicle with the help of Telematics. The accurate data helps insurers to get a better estimation of the mileage and driving habits of the driver. Then, the insurer decides on the premium amount based on your driving skills, basic vehicle information, and driving data.
When you opt for UBI, you have to install a tracker on your car, which will collect your driving data, and it will be used on a large stage. It will create your driving risk profile for your welfare and your insurance company. It stores the following data:
1. Frequency of usage of your car
2. Average speed of your car
3. Accelerating and braking pattern of your car while you drive
4. Based on your driving, you are rated if a safe driver or harsh driver
This information is used to charge the appropriate premium for your car insurance. So if you have a low-risk profile with an excellent driving score, you have to pay less premium than a reckless driver.
Also, this UBI comes in variants like:
1. Pay as You Drive (PAYD): Premium charged based on the amount of driving
2. Pay How You Drive (PHYD): Premium is decided based on driving skills
3. Distance-based Insurance: This is miles-based insurance; in this, the total number of miles covered by the car during the policy period will decide the premium
Let us share some of the advantages of UBI:
1. Having a personalized car insurance plan can save your pocket to a reasonable extent
2. It’s a rewarding system for safe and skilled drivers
3. In critical times like accidents, your location is easily tracked and rescued on time with medical aids
4. Insurance companies get closer conversations and better relations with customers
5. This information or data analysis helps in identifying and reducing accidents or rash driving
6. Increases customer’s interest as well as reduces claim cost. This further results in low-risk driving and safe drivers
Lastly, the UBI concept is still a new segment in the insurance industry but transforming digitally with more accurate information and benefits. So, get the advantages from UBI when you buy your online car insurance.