How You Can Go From Paying High Premiums to Saving Big with UBI
What if car insurance prices were based on how well you follow the rules of the road? Doesn’t it seem fair that insurance companies would reward drivers who make the roads safer and reduce the costs they might have to pay for accident claims? That’s the idea behind Usage-based car insurance (UBI). With UBI, the safer you drive, the less you’ll pay for TPL or Comprehensive insurance prices. It’s as simple as that!
What is usage-based car insurance?
Usage-based insurance is a type of policy that bases your insurance price on your specific driving skills and behaviours, rather than solely relying on the traditional formula most insurance providers use. So, instead of determining car insurance prices based on general criteria, your insurance costs are based on how, when, and where you drive.
Now, let’s talk about how UBI works
The magic behind usage-based insurance lies in telematics, a blend of telecommunications and informatics. To get started, insurers provide you with a small device that you install in your car or a mobile app that tracks your driving behaviors. This device will collects data on various aspects of your driving, and send this data back to the insurance company, which then analyzes it to set your insurance price. It’s quite simple. Just avoid violations and dangerous behaviors, and you can enjoy benefits and discounts offered by the insurance company.
What kind of data does UBI collect?
Well, they can collect and analyze information like your speed and acceleration, how you pass other vehicles, your braking habits, whether you use your phone while driving, when you drive, how far you travel on each trip, the circumstances of any accidents, and more.
UBI Vs. Traditional car insurance
| Aspect | Usage-Based Insurance | Traditional Car Insurance |
|---|---|---|
| Premium Calculation | Based on driving habits and behaviors. Safer drivers may pay less. | Fixed monthly or annual premium, based on factors like age, location, and vehicle type. |
| Cost Savings | Potential for significant savings for safe drivers. | Limited savings opportunities unless eligible for Loyalty/ Najm discounts. |
| Fairness | Fairer, as drivers are charged based on their actual risk and behaviors. | May be perceived as less fair, as all drivers in the same risk category pay the same rate. |
| Data Collection | Requires a telematics device or mobile app to track driving habits. | No data collection for premium calculation. |
| Safe Driving Incentives | May offer rewards or discounts for safe driving habits. | Only offers a discount for not filing at-fault claims. |
| Privacy Concerns | Requires data sharing with the insurance company, which may raise privacy concerns. | Traditional insurance also involves sharing personal information. |
| Availability | Only offered to comprehensive car insurance policyholders in Saudi. | Widely available from various insurers. |
Top 5 benefits of switching to usage-based car insurance
- Cost Savings: The most significant advantage is the potential to save money. If you’re a safe and responsible driver, your insurance premium could be significantly lower than with traditional policies. This means more money in your pocket.
- Fairness: Usage-based insurance is fairer. You’re not subsidizing the reckless behaviors of others, which can happen with flat-rate policies.
- Safer Driving: Knowing your driving habits are being monitored can encourage you to be a safer driver. Over time, this can lead to safer roads for everyone.
- Customization: Your insurance premium reflects your actual driving habits, making it a more customized solution.
- Incentives: Some usage-based programs offer rewards for safe driving, such as discounts, gift cards, or other incentives, which can be a nice bonus.
Is usage-based car insurance available in Saudi?
Not exactly, but the closest thing we have to “usage-based” insurance in Saudi is Tawuniya’s ‘Drive’ application.
This app leverages smartphone sensors and GPS to assess your driving performance. After each trip, you’ll receive a detailed analysis of your journey along with related results and even an incentive reward for good driving. However, user reviews in app stores highlight a current issue: the app logs all trips, whether you were the driver or just a passenger. Ideally, the app should only record trips in which you were the one behind the wheel without affecting your performance ratings.
In general, all insurance companies in Saudi Arabia promote safe driving habits and offer a no-claim discount to the most responsible drivers. If you’re wondering about your eligibility for this discount, Najm’s elgiblity service can help you figure it out!
Verdict: Is UBI right for you?
Studies show that the use of telematics has reduced the number of accidents in some countries by up to 50%. This is achieved by improving driver behavior and encouraging them to follow safe driving practices. This has had a positive impact on their driving records and road safety.
If you’re a responsible driver who values safety, savings, and fair insurance costs, usage-based car insurance might be the perfect fit for you. However, if you’re a high-risk driver, you may not see the same insurance savings
Keep in mind that not all insurance companies offer usage-based policies, so it’s essential to shop around and compare options to find the best fit for your needs.
Start saving today
Usage-based car insurance is the future of auto coverage, bringing fairness and cost savings to responsible drivers. So, why pay more than you need to? Make the switch to usage-based insurance and drive confidently knowing your insurance premium is in your control.
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