The automotive industry, much like the rest of the world, has invested quite a lot in the introduction of new technology. The insurance industry has followed suit and now relies more on technology for operations than ever before. This growth has not only transformed the auto insurance market but changed the claims process and the structure of auto insurance policies. This domino effect has been felt by manufacturers, consumers, and insurance professionals over the past few years and will continue to impact the market. Understanding how this technology will affect your auto insurance can help you use it to your advantage.
What Technologies Have Been Introduced to the Automotive Industry
Just a decade ago, electronic cars and electronic features were still considered a rarity. Today, they are the norm and are replacing standard cars more and more. The main advances in the auto industry can be broken down into two categories: electronic cars, and high-tech features. These changes have led underwriters to adjust their approach to auto insurance and have changed how your insurance coverage might look in the future.
Electronic cars, or battery electric vehicles, refer to cars that are completely electronically structured. These car models have an electric motor rather than a traditional engine and run on battery power that needs to be charged. They don’t use gas or have any liquid fuel components. Cars that have both electronic batteries and the option to use gas are known as hybrid vehicles, and can sometimes fall into the electronic car category.
High-tech features is an umbrella term referring to all of the new features that have been introduced into modern cars. This includes features like front and back cameras, automatic emergency braking, blind spot monitoring, auto parking assist, self-driving, AI dashboards, increased sensors, and even stop sign recognition.
How Will Electronic Cars Change Your Insurance?
Electronic cars are generally more expensive than a traditional cars. Replacement costs are on average 3% higher than a standard gas car. Larger maintenance, like replacing an EV battery, can range anywhere from $5,000-$15,000 depending on the make and model of your car. A gas car battery is typically under $500. On top of the replacement costs, electronic cars require specialists who know how to properly install equipment and they won’t be as common as traditional mechanics. So that means that choosing the safer car may not actually result in lower insurance costs. In most cases, premiums will be higher as they reflect the costs of replacement.
On a positive note, you may experience far fewer claims once you switch to an electric vehicle. Overall, electric vehicles continue to show much lower collision and property damage claims compared to standard cars. Recent data shows that electric vehicles experience 20% less collision damage and 17% less property damage.
Will High-Tech Features Change Your Insurance?
More cars have been built with advanced camera technology, sensors, movement detectors, and other features that can help create a safer driving experience. These features can be found in standard gas-run cars and electric vehicles. While these features can be great tools for safety and convenience, they can also come with their own problems.
For example, self-parking and self-driving leave room for error, if there were to be a malfunction, in the system. The comfort these features provide often leads to the driver paying less attention to their surroundings and driving. Regardless of the features of your car, the driver is always held responsible. So for example, if a sensor didn't work properly and the driver was not paying attention and got in an accident, they would be at fault. These reasons, and the cost of these additional features, will most likely have your insurance costs going up. Most underwriters see these features as high risk for greater loss.
Additionally, these features may change the claims process in the event of an accident. High-tech cars have data being collected through all of these features, meaning they can record your driving habits and even save video footage from your dash cams and backup cam. Some insurance companies even offer tracking devices to opt into the collection of this data. If you’re a good driver, this can come as a benefit to you. Instead of a claims process that is long and “he said she said” style, for instance, companies can use the footage to clearly see how an accident or damage played out.
If you’re not following best driving practices, this could come to harm you. Your insurance rates could go up if insurance companies see that you are speeding, driving more than you’ve reported, or were at fault for an accident. These features aim to increase safety, but also have highly accurate recordings that all drivers should be aware of.
How to Save on Auto Your Insurance Policy
If you’re thinking about purchasing an electric vehicle, or one that has high-tech features, you can still save money on your insurance. The best way to do this is through good driving habits. Safe driving, attention while auto features are running, and regular maintenance will ensure that your car stays in good condition and you don’t put yourself at risk for an accident. It will also ensure that if an insurance carrier, either yours or a third party’s, requires your car’s data - it will be in your favor.
For electric vehicles, the money you save on gas and through tax incentives could easily make up for the higher cost of your insurance and help you save overall.
As always, shop around for the best rates. Compare prices, policies, and coverage options to get the best deal for your car no matter what features it includes.
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