How Does Technology Affect Your Car Insurance Rates?

 Car Insurance

When you’re shopping around for car insurance, you’re more than likely looking for the best deal. Car insurance premiums are impacted by a wide variety of factors.

Some of these are personal factors such as where you live, how old you are, your driving history and your credit score. Other issues that impact the cost of car insurance include the type of vehicle you drive. For example, if you’re going to insure a Porsche Boxster, you are probably going to pay quite a bit more than someone who’s insuring a minivan.

Insurance companies do the math to determine how much risk they might be taking on with you when they insure you, which is why these factors are important.

Sometimes there are things you can do, including additions you can make to your car that may lower your rates, but these technology features and add-ons might not always have the financial impact you hope for.

The following are some things to know about how technology can affect your car insurance rates.


Features Commonly Included on New Cars

There are some things that are routinely included in new cars, and not even just luxury vehicles.

For example, technology might include anti-theft devices and security tech.

Those tend to save drivers very little—less than 1% on the cost of their car insurance.

However, not all safety and security technology is viewed the same by insurance companies, and some features do offer more savings.

The one safety feature included in new cars that tends to lower insurance rates at least a tiny bit is electronic stability control, however, on average, it lowers prices less than 0.50%.

Features included in cars like rear-view cameras, blind-spot monitoring, and night vision are not likely to save you anything despite the reduced risks these can bring.

As far as anti-theft technologies, you might get a bit of saving but not much.

Passive disabling devices, tracking devices, and audible alarms can reduce your costs very modestly.


A Surprising Finding

You may wonder why these safety features that seem to work well and security features aren’t lowering insurance costs. One reason is that technology means cars are now more complex.

If a car is damaged in an accident, it’s actually more challenging to repair it. For example, there may need to be repaired to the complex electronic elements of the vehicle.

These repairs are not only costlier and often require specialized parts, but they take longer, so it increases labor costs.

The people who do the labor also have to have more specialized knowledge.

In general, these are some of the factors that have led to increases in the cost of car insurance even as cars have potentially gotten safer.

There are a couple of other potential contributing factors that can explain why new technology doesn’t save as much as you might think on insurance.

First, there’s not a lot of comprehensive research that looks at how truly effective these forms of technology are. There is also an issue in human error, and that can’t be eliminated by technology.

There are also safety-related discounts that are only available to certain parts of your premium.


How Will Autonomous Cars Affect Insurance?

There could be shifts in the car insurance industry with the implementation of self-driving vehicle technology.

Insurers are going to have to look at what’s happening with autonomous technology and start figuring out who would face liability in the case of accidents. Will it be the driver or will it be the carmaker?

We don’t yet have a definitive answer to that, but there are already accidents happening relating to autonomous cars.

There was a Federal Automated Vehicles Policy released by the National Highway Traffic Safety Administration that showed individual states are going to have to be the ones to primarily decide who is a liability in accidents involving automated vehicles.

Of course, that then raises the question of what happens when a self-driving car goes across state lines and is then involved in an accident.


What About Tracking Devices?

Finally, another area of technology that some people wonder about when it comes to saving on the cost of car insurance is the use of tracking devices. These devices will offer you a discount if you use a device that monitors your driving habits and location.

If you’re deemed a safe driver, they may offer you more of a discount.

Many find this trade-off for access to their personal information isn’t worth the usually small discount, however.


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