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This differs from traditional insurance, which attempts to differentiate and reward "safe" drivers, giving them lower premiums and/or a no-claims bonus. However, conventional differentiation is a reflection of history rather than present patterns of behaviour. This means that it may take a long time
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usage-based insurance (i.e. the latter two types, in which vehicle information is automatically transmitted to the system) provides a much more immediate feedback loop to the driver, by changing the cost of insurance dynamically with a change of risk. This means drivers have a stronger incentive to
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The formula can be a simple function of the number of miles driven, or can vary according to the type of driving or the identity of the driver. Once the basic scheme is in place, it is possible to add further details, such as an extra risk premium if someone drives too long without a break, uses
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adopt safer practices. For example, if a commuter switches to public transport or to working at home, this immediately reduces the risk of rush hour accidents. With usage-based insurance, this reduction would be immediately reflected in the cost of car insurance for that month.
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P. Handel, I. Skog, J. Wahlstrom, F. Bonawide, R. Welsh, J. Ohlsson, and M. Ohlsson: Insurance telematics: opportunities and challenges with the smartphone solution, Intelligent
Transportation Systems Magazine, IEEE, vol.6, no.4, pp. 57-70, winter 2014, doi:
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In order to make sure that patents did not hinder its Pay as You Drive development program, Norwich Union purchased the UK version of EP0700009 and obtained an exclusive license to any EU patents that may emerge from
Progressive's EU patent applications.
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J. Paefgen, T. Staake & F. Thiesse, "Resolving the
Misalignment between Consumer Privacy Concerns and Ubiquitous IS Design: The Case of Usage-based Insurance", International Conference on Information Systems (ICIS),
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concerns especially in the case of systems which use continuous GPS tracking of vehicles. Personal information such as where you drive may also be inferred using only data such as speed and distance driven.
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There are limits to the ability of any insurance system to predict future risk, including usage-based insurance. Some lower-risk drivers will still subsidize some higher-risk drivers, to some extent.
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Coverage is based on other data collected from the vehicle, including speed and time-of-day information, historic riskiness of the road, driving actions in addition to distance or time travelled.
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Social benefits from accessibility to affordable insurance for young drivers - rather than paying for irresponsible peers, with this type of insurance young drivers pay for how they drive.
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Pay as you drive (PAYD) means that the insurance premium is calculated dynamically, typically according to the amount driven. There are three types of usage-based insurance:
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Coverage is based on mileage aggregated from GPS data, or the number of minutes the vehicle is being used as recorded by a vehicle-independent module transmitting data via
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Pricing plans based on behavior may be harder to compare between insurance companies, making it more difficult for consumers to price shop and reducing competition.
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Technology that powers UBI/PAYD enables other vehicle-to-infrastructure solutions including drive-through payments, emergency road assistance, etc.
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360:"Insurance Fee Calculation Device, Insurance Fee Calculation Program, Insurance Fee Calculation Method, and Insurance Fee Calculation System",
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Higher-risk drivers pay most per use, thus have highest incentive to change driving patterns or get off the roads, leaving roads more safe.
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Iqbal & Lim, "A Privacy
Preserving GPS-based Pay-as-You-Drive Insurance Scheme", International Global Navigation Systems Society, 2006
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has been proposed. A US patent application combining this technology with a usage based insurance product was open for public comment on
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Commercial benefits to the insurance company from better alignment of insurance with actual risk. Improved customer segmentation.
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The simplest form of usage-based insurance bases the insurance costs simply on distance driven. However, the general concept of
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Another form of usage-based insurance is PHYD (Pay How You Drive). Similar to PAYD, but also brings in additional sensors like
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includes any scheme where the insurance costs may depend not just on how much you drive but how, where, and when one drives.
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The same GPS technology can often be used to provide other (non insurance) benefits to consumers, e.g. satellite navigation.
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whereby the costs are dependent upon type of vehicle used, measured against time, distance, behavior and place.
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Nowotarski, Mark, "Progressive Builds a
Fortress of Patent Protection", Insurance IP Bulletin, October 15, 2004
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Dijksterhuis, Chris; Lewis-Evans, Ben; Jelijs, Bart; Tucha, Oliver; de Waard, Dick; Brookhuis, Karel (2016).
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mounted wireless data loggers declared invalid. Progressive uses these devices from a competitive supplier,
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that have been filed worldwide on various inventions related to telematic auto insurance. These include:
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before safer (or more reckless) patterns of driving and changes in lifestyle feed through into premiums.
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technology could be used to trace the vehicle whereabouts following an accident, breakdown or theft.
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http://www.advocatedaily.com/areas-of-law/usage-based-car-insurance-as-refined-discrimination.html
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Shaheen
Samavati "Progressive files suit against Liberty Mutual", The Plain Dealer, June 21, 2010
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299:"Motor vehicle monitoring system for determining a cost of insurance" Progressive auto insurance
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492:"Introducing ‘Pay How You Drive’ (PHYD) Insurance Insurance that rewards safe driving, 2016
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519:"In-car usage-based insurance feedback strategies. A comparative driving simulator study"
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344:"Vehicular Insurance Bill Calculating System, On-Vehicle Device, and Server Device",
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Social and environmental benefits from more responsible and less unnecessary driving.
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The smartphone as measurement probe for insurance telematics has been surveyed
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of the data encourages good driver behavior by comparison with other drivers.
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Big
Brother in the Back Seat, Electronic Design Magazine, Sept. 06, 2004
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Harold Davis "’Black Box’ idea travels to cars", The News-Times, 5/22/09
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Patent Q&A Declaratory
Judgment, Insurance IP Bulletin, October 2010
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by Dewri et al. (ACM Workshop on
Privacy in the Electronic Society 2013)
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by
Troncoso et al. (Workshop on Privacy in the Electronic Society 2007)
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Threat to Privacy Found in Auto Insurance 'Pay as You Drive' Programs,
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lawsuit against Hughes Telematics to have several its patents covering
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162: in this section. Unsourced material may be challenged and removed.
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More choice for consumers on type of car insurance available to buy.
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their mobile phone while driving, or travels at an excessive speed.
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over one of Progressive's Pay As You Drive auto insurance patents.
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328:"Determination of activity rate of portable electronic equipment"
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US patent application 20090063201 "SoberTeen driving insurance"
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https://www.sciencedaily.com/releases/2013/09/130910165316.htm
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For usage pricing, driving habits must be documented, raising
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Telematics have been proposed or utilised in order to detect
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enhances both personal security and vehicle security. The
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581:"Insurance Company Telematics Trade Perks for Privacy"
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Inferring Trip Destinations from Driving Habits Data
197:Potential cost-savings for responsible customers.
695:advocacy organisation (British Columbia, Canada)
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286:"Individual evaluation system for motorcar risk"
215:For telematic usage-based insurance: Continuous
737:UBI set for the mainstream? (February 26, 2013)
447:National Association of Insurance Commissioners
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376:filed a patent infringement lawsuit against
721:PriPAYD: Privacy Friendly Pay-As-You-Drive
689:Environmental Defense Fund (Nov. 12, 2008)
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178:Learn how and when to remove this message
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443:"Usage-Based Insurance and Telematics"
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687:"Drive Less, Pay Less for Insurance"
160:adding citations to reliable sources
707:BBC News Report (December 1, 2006)
705:"Motorists 'must pay for road use'
693:Pay-As-You-Drive Vehicle Insurance
411:. The use of telematics to detect
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732:The Economist (February 23, 2013)
701:BBC News Report (October 5, 2006)
699:"Insurer launches per-mile cover"
312:"Reporting of meter indication "
579:Barry, Keith (August 19, 2011).
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147:needs additional citations for
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536:10.1080/00140139.2015.1127428
352:WO application 2005083605
336:JP application 2002259708
124:to monitor driving behavior.
711:Texas Driving Research Study
217:tracking of vehicle location
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385:Progressive Auto Insurance
374:Progressive Auto Insurance
482:10.1109/MITS.2014.2343262
264:There are several issued
84:Coverage is based on the
55:mile-based auto insurance
27:Type of vehicle insurance
88:reading of the vehicle.
362:AIOI Insurance Company
417:Texting while driving
31:Usage-based insurance
389:declaratory judgment
156:improve this article
757:Transport economics
270:patent applications
240:Potential drawbacks
671:2010-06-18 at the
566:2008-08-12 at the
409:distracted driving
397:Xirgo Technologies
383:In September 2010
128:Potential benefits
752:Vehicle insurance
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529:(9): 1–13.
452:22 February
168:August 2018
99:technology.
746:Categories
523:Ergonomics
427:References
304:EP 2803046
291:US 5797134
278:EP 0700009
199:Potential
111:Telematic
93:cellphone
669:Archived
564:Archived
545:26653393
387:filed a
86:odometer
266:patents
260:Patents
250:privacy
69:Concept
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346:Toyota
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330:Movelo
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53:) and
585:Wired
393:OBDII
225:could
541:PMID
471:2012
454:2014
415:and
51:PHYD
43:PAYD
18:PAYD
531:doi
221:GPS
158:by
95:or
45:),
35:UBI
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