If you’re looking for ways to save money, consider whether you’re spending too much on auto insurance.
During the worst of the pandemic, Indian poet Prasoon Joshi said, “Every crisis ushers in great change.” Joshi’s words track. As we emerge from pandemic-related isolation, we’re making a note of all that has changed. We’re looking for more imaginative ways to put money into our savings accounts and to prepare for the next emergency that may arise.
Just as we’ve changed, so have businesses across the country. Slammed by the impact of the global pandemic, many businesses have had to adapt to stay afloat. The Ascent reached out to Sarah Jacobs, Vice President of Personal Lines Product Development at Nationwide, to learn how her company has changed over the past 16 months — and what those changes mean to us as consumers.
A new approach
According to Jacobs, “The days of the ‘one-policy-fits-all’ approach to auto insurance are over.” Drivers have unique needs and should be able to purchase insurance that fits their needs. After all, it makes no sense to pay for more coverage than required.
Jacobs points to Nationwide’s usage-based insurance options: SmartRide® and SmartMiles®. Both are an example of giving the consumer what they want and helping them save money.
What is usage-based insurance?
Usage-based insurance (also known as “pay as you drive” or “telematics”) uses your driving behavior to calculate your premium. The safer you are behind the wheel, the lower your premium.
To better understand how usage-based insurance works, we break down both SmartRide® and SmartMiles®.
SmartRide® is perfect for casual drivers with excellent driving habits. Here’s how it works:
- After enrolling in SmartRide®, the driver downloads the SmartRide app to their smartphone, activates it, and drives as they normally would.
- Drivers can check the app whenever they want to see how they’re doing and track how their driving habits can save them money.
- Based on the driving behavior recorded on the SmartRide app, the driver learns just how deep their policy discount will be and can lock it in.
Four factors go into determining the driver’s discount:
- Number of miles driven
- Frequency of hard braking and acceleration
- Idle time
- Amount of nighttime driving
SmartMiles® is another perk of having Nationwide auto insurance and is designed for folks who drive less than the average driver. It’s especially attractive for those who live and work downtown, work from home, or have an extra car they rarely drive. While drivers get the same kind of coverage they would with a traditional Nationwide policy, they’re offered a monthly rate based on how many miles they drive. It puts control back into the hands of a driver who wants to save money on their auto insurance by driving less.
According to Jacobs, SmartMiles® launched in seven states in 2019. Once the pandemic hit and drivers were spending less time on the road, the company expanded the program to 40 states.
Change was necessary
“We knew 2020 was going to be a year of change, but no one could have anticipated how significantly the COVID-19 crisis would reshape the business environment and accelerate the need for change in the insurance industry,” Jacobs told us.
The company also developed Nationwide Express, which helps agents quote multiline policies and complete sales in minutes. In addition, it released “conversational texting,” a technology that allows their customers to connect directly to their claims representative from a smartphone. So again, the power is in the customers’ hands by allowing them to reach out to their claim reps from anywhere in the world. It’s both technologically savvy and a thoughtful way to respect customer’s time.
The contagious nature of COVID-19 also inspired Nationwide to accelerate and expand the use of virtual damage appraisals. That means that videos, photographs, and drones can all be used to assess and settle damages.
Given that policyholders who signed up for SmartRide® and SmartMiles® saved up to 40%, Nationwide anticipates that 70% of new auto business will shift to usage-based coverage by 2025.
Tips for reducing auto rates in 2021
For drivers looking for ways to take control of their auto insurance premiums, here are seven tips that could help.
- Enroll in a usage-based program.
- Don’t pay for more coverage than is needed (if someone drives a few miles a week, they shouldn’t pay for a few hundred miles).
- Shop around for car insurance quotes before shopping for a car. Simply put, some vehicles are more expensive to insure than others. Drivers should make sure they can afford both a new car and a higher insurance premium.
- Raise the deductible. The higher the deductible, the lower the premium. Before making the change, though, drivers should make sure they have enough money put away to cover the new, higher deductible.
- Check out discounts. Insurers offer discounts for everything from age to occupation. Figure out which discounts are applicable and take advantage of them to lower the premium.
- Bundle coverage. Carrying different types of coverage (like auto, homeowners, renters, and life) with one company can score drivers a healthy rate discount.
- Rethink coverage on an old car. Let’s say a vehicle is 15 years old and has a Kelley Blue Book value of $1,200. It may be time to lower comprehensive coverage and focus on liability for an immediate rate cut.
If an insurance company can change with the times, maybe it’s a sign that we can, too.
Ensure you are selecting the right car insurance coverage
Auto insurance is something that most people don’t think about very frequently. While there are several factors that drive people to look to change auto insurance carriers, it is important to educate yourself in order to ensure you select the right coverage for you. The right coverage means not paying for coverage you don’t need and not foregoing coverage that would make sense for your personal situation. While price is a major factor, we also consider other factors such as customer service and the claims process when choosing what we think are the best auto insurance providers.