Cars have been insured since the late 19th century in the United States. The insurance industry is constantly on the move. Insurers are always looking for new ways to avoid paying out in order to make a profit. At the same time, they are always looking for innovative ways to offer customers competitive prices using new technology and pricing schemes. Here is a quick guide to some of the more recent developments in the insurance industry.
The Black Box
The so-called ‘black box’ is a development in the world of auto insurance that has saved customers thousands of pounds. It also benefits the insuring companies hugely. Essentially, these devices collect information about the movements of a vehicle in real-time and log them with an insurer. If an insurer’s software detects unsafe driving habits like speeding, then the customer in possession of the black box will be charged more for insurance. In this way, it rewards good driving and punishes risky driving. The black box concept is a trade-off between privacy and convenience. Many car owners have chosen to eschew these new devices in order to feel more in control on the road. As of May 2018, almost all newly built American cars have the capacity to track and send telemetric data. There have been instances of black boxes serving as crucial evidence in court cases.
Covid 19 Relief
Covid 19 has impacted nearly every aspect of society. During the first two years of the pandemic, there was a marked decrease in the number of cars on the road. This led some drivers (and regulatory boards) to wonder why people were paying so much for insurance that they couldn’t possibly ever need to cash in on. This led to several states ordering insurance companies to offer covid 19 relief in the form of discounts or repayments to customers that had been short-changed.
Some companies have opted to go in a different direction. Companies like Root Insurance offer customers the chance to reduce their coverage to the state minimum level during pandemics in order to lower their costs. Insurance should be priced in a way that is relative to the likelihood of it being claimed by a customer. Any costs that fall beyond that relativity are quite rightly denounced by state governments and commentators.
Texting while driving is a crime in many states. It is, of course, very dangerous. It can land you in hot water if you are caught doing it or cause an accident while looking at your phone. An increased level of connectivity between insurers, law enforcement, and customer data means that you could also receive a penalty from your insurer if you are caught using your mobile phone at the wheel. A recent report from the New York Times noted how minor infringements can lead to double-digit increases in insurance costs. The fine for a texting and driving violation is often dwarfed by the cost of insurance increases in the years after a crime.