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Car insurance companies use total annual mileage driven to calculate insurance premiums. Some insurance companies offer an odometer device to calculate car insurance mileage.
Reading: How do insurance companies verify mileage
but should I choose to get it? and do you have to use an odometer device? we are here to answer these questions for you! Read on to understand how car insurance companies can see your odometer reading and the distance you drive.
how do auto insurance companies get your car’s odometer reading?
Auto insurance companies obtain odometer readings in several ways. they may ask you directly, get it through a tracking device, or request your odometer reading from third-party companies like mechanics or repair shops. Insurance tracking devices come as dongles that you can plug into your car or an app for your smartphone.
what is an insurance tracker?
with an insurance tracker, you’ll connect it to your car. Insurance tracking devices are called telematics devices and they track more than just total mileage driven.
A typical telematics device connects to the vehicle’s computer and then sends data to the insurance company. Data collected includes speed, mileage, location, braking habits, phone use, night driving, fast cornering, and traffic patterns.
This information is analyzed by the insurance company to determine if you are considered a safe driver with low risk of an accident.
how does it really work?
See also: Five steps to improve insurance innovation | McKinsey
The most common odometer tracker is a dongle that plugs into your obd-ii port, usually under the steering wheel. the purpose of the dongle is to collect data. such as speed, braking, mileage and phone use.
The phone app works similarly but accesses your phone’s gps. While the app doesn’t have direct access to vehicle data, it can detect speed, acceleration, speed limits, total mileage, and sudden braking.
In both cases, the data is sent wirelessly to your insurance company. This data can affect insurance premiums for better or worse, depending on how well the data collected matches your previous insurance record.
what is a vehicle odometer reading?
A vehicle’s odometer reading is a physical reading or photograph of your vehicle’s odometer. With an annual or semi-annual odometer reading, auto insurance companies will have an accurate picture of your annual mileage.
what data is tracked?
The precise data that is tracked may vary by insurance company. If in doubt, check with your auto insurance company. Generally, an insurance company will track mileage driven, average speed, traffic conditions, sudden braking, phone use while driving, night driving, and accidents.
These factors contribute to your policy premium in some cases. in fact, they can even make your premium go up or down, depending on your situation.
use of modern technology by insurance companies
Insurance companies have used modern technology to reward safe drivers and further refine their models. Insurance is based on projections and probabilities, such as your age, your gender, your car model, your previous driving history, and previous insurance records. These are all factors considered by insurance companies.
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Now, instead of just using probabilities, they can collect real-time data from customers for more sophisticated data analysis and accident probability analysis. Even if it seems intrusive, driving safely can mean lower premiums and long-term savings.
how insurers calculate mileage
If insurers do not use a mileage tracking device, they may collect mileage through your personal reports, databases, or third parties such as your mechanic. Generally speaking, insurers will ask you for an estimate of your total mileage, but they may also take an annual odometer reading for verification purposes.
If they choose to use databases or repair shop information, they could have an accurate odometer reading at any time. It is important to report mileage as accurately as possible to insurance companies to obtain fair premiums and avoid insurance fraud.
Is it legal for car insurance companies to keep track of your miles?
By agreeing to use auto insurance, you agree to provide accurate mileage information. Insurance companies need accurate mileage information to calculate insurance premiums. the more you drive, the greater your chances of having an accident over time.
however, you will need to specifically agree to install a tracking device or dongle. Some insurance companies don’t require them, while others offer them as an optional feature. if you agree to install the device and allow the insurance company to use that information, it may result in lower rates if you are a safe driver.
better driving equals lower premiums
How do auto insurance companies know how far you drive? with an odometer device, or through self-reporting or third-party reports to determine automobile insurance mileage. If you are concerned about a car tracker for privacy reasons, you can choose an insurance company that relies on self-reports, databases, or third-party records.
However, keep in mind that evidence of low annual mileage and safe driving will benefit your insurance record and may lead to lower insurance premiums. Whether you choose a smartphone app, car accessory, or self-report, it’s a good idea to be prepared for unexpected vehicle expenses, maintenance, and repairs.
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See also: Average Price of Car Insurance 2022 | ValueChampion Singapore