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How Technology Can Impact Car Insurance

Friday, 22 November 2019

It’s nearing the end of 2019, and self-driving cars are moving into markets slowly but surely. Who knew the future would come so soon? Even without autonomous cars, most vehicles are equipped with mini computers installed directly in the dashboard. Not only that, cars also come with multiple safety features to lower the risk of an accident. So, how does car insurance change when it comes to these new features?

Impact of Portable Technology on Car Insurance

About 70% (25.5 million) of people own a smartphone in 2019. This entails that technology is affecting our day to day living, especially when it comes to driving. Our smartphones continue to worsen our driving habits on the road and contribute to distracted driving. The more screens there are, the more distracted you are while driving, means the higher risk of an accident, therefore resulting in increased insurance premiums to make up for the rise in cost insurance companies must pay. Most accidents are caused by human error that can be prevented.

Insurance companies have realized the rise in smartphones and started to use them to their (and your) advantage. Many auto insurers now use apps to personalize policies according to the specific driving habits of their customers. Data is collected and stored through this app to see whether you are a “good” driver, offering you up to a 25% discount for good driving habits. This data can include how often you use your phone while driving, what speed you drive at, how often you slam on your brakes among other things.

Autonomous Vehicles Technology and Car Insurance

Self-driving cars are probably one of the most exciting features to have in cars yet. They are exactly how it sounds, driving without anyone being behind the wheel. In terms of insurance, it is a difficult market for insurers to understand. The first complication is liability. If you get into an accident while using the autonomous feature on a self-driving car, who becomes liable? The insured or the manufacturer? It is said that insurers will consider that the driver might not be responsible for an accident that is caused by the vehicle driving itself and might have to come up with totally new policies, one for the driver and one for the vehicle operating on its own. It is suggested that the maker of the vehicle should ultimately be liable in these instances. Data-sharing between the manufacturers, owners and insurers could help determine the cause of an accident indicating what mode the vehicle was in and how the operator was using the automated technology at the time.

As autonomous vehicles gain popularity, there is a prediction for a decline in accidents over time. Considering the cause of almost all accidents is human error, taking human-drivers out of the equation should result in less accidents on the roads. Because of the lower amount of accidents, it could result in lower insurance premiums as well. As of right now, there is more research to be done therefore the cost to insure these vehicles could be higher than that of a regular car, this could change as autonomous vehicles gain popularity.

Impact of Increased Safety Features on Auto Insurance

Safety features can include automatic emergency braking, blind spot warning, lane departure detection and pedestrian detection. With these features, the risk of an accident is decreased, which can result in lower insurance premiums. However, insurance rates could increase for the average policy overall. Now that cars are equipped with this technology, this makes things very expensive when it comes to replacing and repairing parts of the vehicle. The parts that would be needed to repair vehicles are more expensive to manufacture, and more expensive to buy. This means that costs for insurance rises due to the increased cost insurance companies must pay to fix a vehicle after an accident. Therefore, discounts on insurance for safety features most likely don’t have a significant effect.

When shopping for a new vehicle, consider the effect it could have on insurance rates. It is important to think about how expensive it would be to repair new technologies that your vehicle will be equipped with. Cars that are the same make, model and year but different trim levels could change the amount you pay for insurance. Different levels of trim come with different features. A base level trim will come with standard technologies, like a back-up camera, while a premium level trim package would come with all the fancy features that are available. Consider which technological features are the most logical for you and decide the trim level from there. You don’t want to be stuck paying more for a car and for insurance because of technologies you don’t ever use.

The age of technology is constantly moving, faster than most of us can keep up with. The automotive and insurance industry much continually evolve to stay ahead of their target markets. If you’re looking at purchasing a new vehicle with all the new features available, we strongly recommend talking with a BIG insurance broker to discuss how it will affect your insurance policy.         

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By: Serenity Roberts