Have your question or comment appear below!

The Future of Car Insurance

Cars and car insurance will be drastically different in the future. It's an exciting time for insureds and car insurance executives, since technology will drive down the cost of handling claims, administration costs, acquisition cost, investment income and boost profit margins.

I can see kiosks where you can pay for insurance like a pre paid cell phone card (Tarjeta for my Spanish friends). And once you go past a certain mileage, you are forced to buy more coverage. or your car will not start.

Companies will bind you on the spot, automatically looking up your driving record, credit history and past claims almost instantly.

Self driving car?

Google is talking to a major car company to introduce a self driving car. My 1st thought was that sometimes technology malfunctions, so there may be some bumpy starts. But Google reports they drove 200,000 miles of computer-led driving without an accident. This will lead to the people being able work while on the road. Only the bathroom will be left as a safe refuge from productivity.

Because human error is the cause of almost all accidents, insurance rates would be lower for vehicle owners who let the computer do more of the driving.

Policy Language

Insurance policies will become easier to read. You won't need a legal degree to understand the limitations and exclusions of your policy.

Checking out a company

With more mobile apps and customer reviews, it will be easier than ever to check out an insurance company.

Pay as you drive

Pay per mile insurance will be common, in fact completely usage-based, with cars coming automatically equipped with tracking devices that can't be turned off. Your insurance carrier will be able to examine the way the car was driving in the past, even the places you frequented (bars, sporting events, nightclubs, etc.).

Currently all cars sold in the US have onboard computers aka ECU (engine control units) to get the gas mileage, emissions control and performance required in by the government. So it's a small step to add vehicle tracking. The future is indeed bright for car insurance carriers, privacy and freedom, not so much.

With telematics or usage-based insurance, your premiums are based on how far you drive, g-force when breaking and taking corners, speeds, and time of day you drive. You will be charged because of your driving style. All of these things can be measured by GPS based tracking that will soon be standard equipment in newer cars.

Unique Codes & Car Theft

Keys will be a thing of the past, and your insurer knows will know exactly whose driving. Cars will have individual pass codes or biometric scanners to enter and start. If you don't have the right code, you won't get in, much less drive the car. And insurers will get a better idea who is in the car as well as whose driving. The unique pass codes will also allow a limiter on car speeds depending on whose driving. The onboard computer will even limit distractions such as unsafe radio volume levels.

True story, I saw a teenage girl in a brand new car, from a stop sign run into a old chevy van that was parked, mangled her dads car. She had the stereo blasting.

Car theft will largely be a thing of the past, mostly confined to older cars without pass code technology. And that will motivate people to make trade-offs in privacy for lower premiums and lower potential for loss due to car theft. The new age car thief may be very high tech, with laptops designed to override a theft system. They might also very low tech and take your car after you've already started your vehicle, basically car jacking. Solution is a short text or instant message to your car which could disable it, windows and doors locked, turning every vehicle into a bait car.

Love & Marriage

Currently car insurance carriers rely on an honor system to give you a car insurance discount for marriage. In the future, they will have access to the courthouse database of newlyweds, to verify if in fact you were legally married and to who. Ditto for registered civil unions.

Government programs

Because of runaway budgets, I'll stay out on the limb and predict government spending in areas like the California low cost auto insurance program will dry up. Advances in technology will leave state and local governments in the political dust.

Uninsured Motorist

Because you will have a unique pass code that's also accessed by the DMV, if your drivers license, registration and (health?) insurance is not up to date, you may not even be able to get into your car. The DMV won't have many locations you can go to for paperwork, everything will be access able online. So get on that laptop and get covered!

If you run into another driver, you will be able to verify quickly that the other driver does not have coverage, when your insurer tries to instantly interface with their claims department.

High Risk Drivers

People that like to drive fast and/or value their privacy over lower insurance rates will favor older cars without an onboard computer, usually those built before 1980. Kit cars without tracking tech may also become popular. And high risk insurers will cover those cars. More conservative insurers will stop covering cars without tracking technology, since they would naturally find out how the lead foots are.

Current car insurance is like a buffet. You can drive as much as you want and not get charged for it. So you end up paying for accidents of other drivers. Car insurers raise prices on a group of insured based on claims. They do use mileage in calculating cost, but not as a primary factor.

Accidents

When you get into an accident (with damage), the insurance company you use will automatically be notified. They will also raise your premium if you have a number of hard brakes, high speed, and if you spend time driving late at night, which increases your risk of an accident.

The causes of accidents will be determined faster and the at fault driver will in a shorter time (almost immediately?) see their premiums jump. The same with tickets, when you get one, the insurer will be notified right away and "adjust" your premium.

You could look at faster accident assessments as a bad thing, on the other hand, if insurers compensate faster and more accurately for a bad driver, they might charge us good drivers less. After all, we are subsidizing the ones who get into accidents, to some extent.

Hit and run driving will be a thing of the past, as GPS based tracking becomes more accepted and standard in every car. Even family members may also be able to track exactly where your car is at all times, to determine your arrival times. As car insurance carriers personalize each policy, accident forgiveness will become a gimmick of the past.

Claims

Since insurance companies will modernize their claims departments and honed prices for repairs, you will get an email of the closest repair facilities and not worry about prices or costs (as long as you are within limits). Just pay your deductible electronically and you're done. Repair shops may work in shifts to get cars back on the road asap and limit rental car usage. Also there won't be near as many claims thanks to advancements in car safety

Insurance Fraud

With GPS tracking, Insurers will identify staged accidents, and be able to track those that engage in insurance fraud. Single party fraud where one driver is unknowingly involved in insurance fraud will be a thing of the past. With driver tracking, insurers can sort out who gets in multiple repeat accidents, even though if not at fault.

Younger Drivers

Since teen drivers are responsible for more accidents than any other age group, the graduated driver license will become even more restrictive. New drivers will be required to be competent in rain and snow, nighttime, city, and highway driving in order to be licensed.

Safety

Cars will get even more safer, sparing lives and sacrificing the structure of the car to absorb impacts. But injury claims will drop drastically, by far the #1 highest cost for car insurance claims. Microchip-based safety systems which eliminate many accidents entirely will become standard equipment. Future vehicles will be designed with equipment that communicates if things are in your blind spots. Car radar will help you avoid other vehicles, even traffic jams. 5 point harnesses may become standard.

Summary:

The future looks great for safety, and car insurance premiums should drop for safe drivers. Insureds will finally have individually tailored car insurance rates. But there will be sacrifices in privacy. Worth it? Like it or not, our every moves online and offline will eventually be studied, categorized and marketed to. .

Written by Craig J. Casey

Financial Writer helping people with their insurance problems on the net since 1998.

blog comments powered by Disqus