Car manufacturers have been introducing new technologies almost every year. Some are similar to those in smart homes and entertainment systems. Such innovations range from interior systems to safety devices. These prevent or minimize car-related injuries and deaths.
With better safety features, you would think that car insurance rates would go down. However, the reality is more technologies mean higher rates. Insurance providers like Liberty Mutual can attest to this trend. Liberty Mutual insurance reviews show car owners how advancements affect the rates at the company.
Let’s dive deep into how that happens and how you can get your money’s worth.
1. New Technologies Increase Repair Costs
New technologies require more electronic components to be installed on vehicles. Manufacturers need electronic parts for modern features. Some of these are infotainment systems, backup cameras, and blind-spot monitoring.
Consequently, car parts with more advanced features are more expensive to repair. Some of those are bumpers with sensors and mirrors with touchscreen displays. Unlike traditional components, modern car parts take more time and money to repair.
Increased repair time also means higher labor costs and higher insurance rates. According to Liberty Mutual, the cost of replacing a bumper in 2016 is 130% higher than in 2014. This is due to additional sensors and other technologies.
2. Shift in Responsibility to Manufacturers
One popular area of automobile technology is automated cars. Research shows that driver error causes more than 90% of car accidents. Safe driving responsibility is now more on the manufacturer than the driver.
This shift of responsibility will impact how car insurance claims are made. The cases wherein the automated car causes the accident are tricky because there is no at-fault driver. On the other hand, using fully automated vehicles would have fewer accidents. This effect results in fewer claims.
3. Insurance Rates Won’t Fall Despite Increased Safety
The number of car safety features increases with new technologies. You could assume that insurance rates would decline with fewer accidents. But this is not the case. The higher costs of components and repairs seem to cancel out whatever safety benefits they bring.
For example, new cars use adaptive headlights to illuminate corners in the dark. These headlights make it easier for drivers to see at night and avoid collisions. However, an NPR article mentioned that breaking the same headlights in an accident will cost $2,000 to replace. This is ten times higher than the $200 needed to change an ordinary headlight.
4. Possibility of Usage-based Car Insurance
With the internet of things, you might see usage-based car insurance soon. Most modern cars can be connected to the internet. This connectivity will make it easier for insurance companies to use the drivers’ online profiles. These profiles are helpful in monitoring driving behavior.
Companies may implement a similar concept as good driver discounts. They can give drivers car insurance rates based on driving records and habits. You may end up paying lower insurance rates for good driving habits.
5. Car Sharing on the Rise
Another popular trend is car sharing. You may consider enrolling your rarely used car into a peer-to-peer car-sharing agreement to earn extra cash. Before you do, consider how it will affect your coverage.
Your car insurance policy won’t cover claims for accidents that happen while car sharing. However, car-sharing services may provide additional liability coverage to fill this gap.
You may also consider getting separate commercial car insurance to get better protection. Additional coverage will be helpful if you exceed your personal coverage limit. It also applies to cases where coverage for accidents involving car sharing is excluded.
6. Mobile Technology Affects Driving Habits
People are now dependent on smartphones for communication and socialization. Its negative effect is the habit distracts you when driving.
Some people take calls and even type messages while driving. These habits have endangered the lives of drivers, passengers, and pedestrians. According to the Centers for Disease Control and Prevention (CDC), distracted driving has killed 2,800 people. It also injured 400,000 in 2018 alone.
Some insurance companies have labeled drivers with citations for distracted driving as high risk. You don’t want this to happen to you because it will increase your rate.
You may consider technology a double-edged sword when it comes to its impact on car insurance. Innovation has spurred significant advancements in car safety, but it also caused distractions and costly repairs to vehicle owners. The key is to learn how to take advantage of these positive impacts while avoiding the adverse effects.