Usage-Based insurance seems like a great idea. People only pay for the insurance that they need. This means that the deluge of statistics, gender specification, and age would be rendered useless. A driving record would likely still be required, as it is still an insurance company. However, the other monotonous information that has nothing to do with your driving specifically, would be ruled out.
The way usage-based driving works is rather simple. Drivers download the app, snap a picture of their license and hit the road. For about two weeks, the app will continuously run, taking inventory of the information needed to provide a quote. There is no need to open or even bother with the app after initially opening it. At the end of the two weeks, the app will provide the driver with a quote based on their driving.
The good news is that this is a completely individualized way to garner a quote. The bad news is that it is completely individualized, and the user is potentially sacrificing their privacy. This not only includes location, but also the user’s daily business.
Since the app runs in the background, it is logging everything that person does. Where they go and what they are doing.
For instance, information was logged when the person was a passenger in a car. Plus, some users reported the information was logged even when they were running on a treadmill. Not only can the quote be affected by this, but the company also has a detailed account of the person’s movements.
A study conducted in 2016 by the Pew Research Center found Americans have their limits. The study concluded that real-time location sharing was the main issue. Forty-five percent of people surveyed claimed that the company always knowing the person’s location was unacceptable.
Yet, geo-location tracking through social media and cell phones themselves have become more accepted. Therefore, it stands to reason that the issue will dull for car insurance companies as well. When that happens, usage-based insurance will likely become a normal option in the car insurance world.