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Modern auto technology and how it could impact car insurance premium

11 June 2016
Industry experts predict that premiums may fall up to 50% in the coming years if the right technologies are made mandatory in Indian cars. Read on to know more!
 
 

Car insurance premium is considered an integral part of the recurring cost of owning a car. The premium is unavoidable just as one cannot avoid fuel costs or servicing expenses. However, as technology improves, there may come a time when motor insurance premiums may reduce drastically.

Unlike the past when car makers used technology to improve performance and comfort, new-age technologies are being used to make automobiles safer. Safety features such as anti-theft alarm systems and rear view cameras for parking can help you enjoy lower car insurance premiums in India. Let us look at some existing and future technological innovations that can make motor cars safer and stronger, thereby leading to lower premiums

Related: Day and Night - Safety tips for two wheelers riding in India [Infographic]

Rear-View Cameras

The rear view mirror was invented to reduce weight and improve the performance of racing cars. Instead of having a person perched on the hood to help the driver track the cars behind him, a mirror was fixed and this is how the rear view mirror was born.

Although useful, reversing the car in a contorted position when looking into a small mirror increases risk of judgment errors that often result in scratches, damaged bumpers, and even serious damage from collisions with other vehicles.

Today, cameras fitted to the rear stream images to a screen fitted to the car’s dashboard or the entertainment console. These cameras can help the driver avoid losing out on the No Claim Bonus for repairing damages due to judgment errors. Further, premiums fall as risk of collision with other cars during reverse parking comes down significantly. 

Related: What to do after a car accident? [Infographic]

Autonomous Safety Mechanisms

As per the 2013-2015 data released by the UK Department for Transport, eight of the top ten reasons for motor accidents involve driver error. The ninth reason is pedestrian error, which is also a human error. This is why automobile manufacturers such as Volvo, Honda, Toyota, GM, and others are focusing on autonomous mechanisms that will kick in when drivers or other humans make a mistake on the road.

Lasers, radar, or cameras track the car’s position and emit warnings when judgment error leads to a high risk of collision. Autonomous Emergency Braking (AEB) systems automatically deploy brakes without any human intervention which has led to, according to a 2015 car safety study, a 38% fall in rear-end collisions in vehicles.

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Related: Car Insurance - what is covered and how much? [Infographic]

Self-Driving Cars

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Google, Ford, Tesla, and Mercedes are just some firms developing self-driving cars. These cars will be driven by computers that will be faster, more reliable, and more efficient as compared to humans. While kinks in the technology are still being worked out, a self-driven car is likely to be a lot safer than a car driven by a person. Needless to say, this will automatically reduce the risk of accidents and result in an inevitable fall in the premiums.

Car Alarm Systems

We already know that having a car alarm can help you negotiate lower premiums. Improvements to this technology can include features such as:

  • Automatic theft alert to the nearest police station,
  • GPS updates to help the owner track the position of the stolen vehicle.
  • Remote locking of the engine to immobilise the car,
  • Snapshots of the occupants of the car to help the police identify the thieves, and

Stealing a car will become a lot tougher with these safety measures. Owners of such cars can easily demand a reduction in the theft component of their car insurance premium.

Related: Key factors that determine car insurance premium in India

Speed Governors

Based on accident data and statistics, certain groups like teenage drivers are considered as high-risk drivers by insurance companies. Installing speed governors in the car will minimise the risk of speeding, which is invariably the reason for the loss of control among teenage and inexperienced drivers. Further, reduced engine wear and tear will result in lower depreciation during renewal.

Visual Record of Accidents

An in-car dashboard camera can provide an authentic record of the events before and after an accident or mishap for insurance purposes. Or, having a digital camera in the car can help the driver record images and videos of the accident at the earliest. This simple tool can help minimise claim-related complications, false accusations, and other legal problems. Authentic proof that the accident was not one’s fault will help the owner retain the No-Claim Bonus even after the mishap.

Real-Time Tracking by Insurance Companies

It is an obvious fact that safer drivers will enjoy lower premiums. However, until now, insurers lacked the ability to track the driving practices of its customers. Now, insurance customers have begun receiving an electronic chip that tracks the car’s acceleration, braking, turns, and the time of the day of usage of the car. This info will be transmitted wirelessly to the insurer for the preparation of a driving report card. Drivers who get a good grade everyday are likely to see a significant fall in premiums.

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Closing thoughts

In developed countries, such new-age technologies have invariably contributed to a reduction in the premium. Cars with AEB qualify for a flat 5% premium discount. Industry experts predict that premiums may fall by as much as 50% in the coming years. It is just a matter of time before such technologies become a reality in Indian cars and help you enjoy fantastic savings on your insurance premiums.

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