Developments in the pay-as-you-go insurance market

We've had usage-based insurance for a few years now and the technology is developing rapidly. It started off relying on the insurer installing a little black box into your vehicle. This would collect data from your onboard computer and transmit it to the local headquarters of your insurance company. Based on this information, discounts reflecting your milage and safety record would be granted. This is a good system but moderately inconvenient because you have to have the technology fitted and surrender it when you cancel the cover. In the early days, the transmitter proved not very reliable. Now, of course, we have mature technology and everything works really well.

In the meantime, the car and truck manufacturers have been working hard to refine their own computer systems. Many have built-in transmitters to communicate the need for repairs to your own garage. The only problem is the different manufacturers have different systems and none of them talk to anyone other than authorized garages. Until now, that is. Sprint Nextel has been working with the insurance industry to offer a cloud-based solution using its 3G network. Sprint's system collects all the data relevant to deciding how good a driver you are. It passes on the data to your insurer which monitors your performance over time. Presented with this information the insurer has a choice. It can either offer you a flat rate for a fixed term, or it can vary the level of discount month by month.

This gives everyone a chance at earning discounts. The best shot of really cheap auto insurance goes to the seniors, unemployed and homemakers who only drive a few miles every day. But not everyone falls into this convenient group. Some people have long drives to commute to and from work at peak times. Nevertheless, with evidence of good driving, you can still earn discounts. Perhaps it's only affordable and not the cheap policy you were hoping for, but some auto insurance saving is better than no saving. It all comes from verifiable information you are a good driver. That makes it worth giving up a little of your privacy.

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