Pay As You Go Auto Insurance Opinions

A Princeton Survey Research Associates International survey of 1,000 adults found surprising results – 51% of those asked said they would not consider a pay as you go auto insurance program. Many concerns, from privacy to not understanding the programs, cause consumers pause when considering making the insurance

Pay As You Go auto insurance uses a device that plugs into the “OBD-II” port of your car to record driving habits and GPS coordinates. All modern cars have ODB-II ports, which are normally used to feed performance information from the cars computer for mechanics to analyze. The insurance company device looks at what time of the day you drive, where you go, how fast you are going and how hard you break. Some companies require you to only keep the device attached for 30 days while others demand it stays with the car for as long as you are insured.

There are very few companies offering this device currently, with Progressive being the most public advertiser. All carriers insist that the intent of the devices is to reward good drivers and not punish bad ones. However, consumers are rightfully nervous. It should be noted that any rating program, including drive as you go and other monitoring programs, needs to be approved by state regulators and created using sound actuarial methods. Although Illinois has allowed these plans into the states not all have.

For many families auto insurance is one of their greatest expenses and any option that can reduce this expense should be considered. The monitoring devices are especially advantageous for drivers who have had moving violations or accidents. Insurance companies rely on statistics to calculate rates – they need hard evidence of a bad drivers improved habits. Most insurers look at five years of driving records, which is an awfully long time. Using a recording device allows a driver with an incident or two to show they are driving safer immediately.

The verdict is still out on whether these devices are here to stay, if consumers continue to push back it’s likely insurers will stop making investments in the technology and no new carriers will roll out the option. If the technology proves to be beneficial, there’s a chance some insurers will decline to offer coverage without a monitoring device installed. Some future predictors say this is a all a moot point as down the road we will all be sitting in crash-proof self driving cars.

Working with an expert and independent auto insurance agent like Castlewood Insurance Services will allow your family to make an educated decision as to what’s in your best interest. The traditionally sleepy insurance industry is starting to wake up, with customer friendly WalMart and tech savvy Google making potential waves in the space. The insurance carriers, pricing and terms remain local and fragmented  – trusting a local agent continues to be the best way to get honest and up to date information on ways to save on premium costs.

How TRIA Affects Consumers

TRIA (the Terrorism Risk Insurance Act) was signed into law in 2002, after several extensions it appears set to expire at the end of 2014 unless the government takes quick action. The renewal bill appeared to have strong support. However, after additional legislation was added in at the last minute it met unexpected opposition. Lawmakers will likely try to re-implement the bill in 2015 but we are likely facing a period of volatility due to a lapse in coverage.

Before the events of 9/11 most insurers were silent on terrorism coverage – it was explicitly included in policies but was not excluded either. After 9/11 it became, not surprising, for insurers to exclude claims related to a terrorism event. The federal government stepped in and agreed to backstop insurers if they offered the coverage. How it works is quite complicated (give us a call if you want to talk about insurance details) but the government agreed to pay claims in excess of a large deductible of $100M per company (originally $50M). Insurers began to offer terrorism coverage when they took the government incentives and collected unlimited premiums with extremely limited risk. For a large global insurer with billions in paid claims a year a $100M limit on terrorism losses was appealing.

The headlines discussing this issue in recent days claim the business world with stop and the Super Bowl will be canceled, should consumers worry about their personal insurance? The short answer is no. Federal terrorism coverage is extremely limited and the claims must be verified by the Secretary of State. The Boston Marathon bombings, for instance, were not declared a terrorist event and were not subject to TRIA. Unless your insured house or car is near a terrorist target in a major metropolitan area there is likely nothing to worry about.

Castlewood Insurance Services works to educate and inform around insurance issues facing consumers in North Chicago and Lake County Illinois. To make auto insurance, renters and homeowners policies easy to understand give the expert insurance agents a call or stop in.