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How much can you control your car insurance bill? Spoiler: Not much

Noah BudnickNoah Budnick

When you pay your car insurance bill, do you ever wonder what’s behind the premium? How does your driving impact the cost, and how can you control it? Could safer, more responsible driving save you money?

Think about it like your electricity or water bill: if you’re responsible and turn the lights off when you go out in the evening or you get your leaky faucet fixed, then your utility bills go down. Well, if you follow the speed limit or never pick-up your phone when you drive, then your auto insurance bill should go down too, right? Not yet…

The truth is that your actual driving has very little to do with what you pay. The auto insurance industry uses proxy variables to estimate your risk:

This means that you, personally, have very little control over your car insurance bill. You can’t control your age or how long you’ve been driving. No one gets married to lower their car insurance bill. At least they shouldn’t! Nor does anyone seek educational attainment or homeownership to save on car insurance. Commercial drivers have it especially bad, as the insurance industry lumps all of them into a “high risk pool” with rates many times higher than a regular policy that you or I might buy.

If you do the right thing with your lightswitch and save, it makes sense that you should be able to save if you do the right thing behind the wheel, too. (And, I’m not talking about the mileage trackers that some insurance companies hand out. We’re talking about actual safe driving.)

Explaining your car insurance bill

Generally, the insurance industry’s goal is to charge you the right premium for how risky they think you drive. The goal is not to reward safe drivers with lower premiums because they cost the insurance company less. From a business perspective, the problem is that proxy variables are an inaccurate way to price risk. This is bad for business and unfair to customers.

Zendrive knows there’s a better, more accurate and fairer way to measure risk than proxy variables. We use smartphone sensors and machine learning to measure and analyze driver behavior. Our coaching platform can reduce collision risk by as much as 49%. Milliman, the world’s leading actuarial firm, found Zendrive’s system of measuring risky driving is up to six-times more accurate at predicting collisions than the insurance industry’s standard methods.

What can you do?

If you run a commercial fleet, drop us a line, so we can see if Zendrive’s loss control technology can help improve your drivers’ safety and save on your commercial auto insurance.If you’re a regular driver like the rest of us, stay tuned to these pages to see how we explore risk and how to better price it.

 

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Noah Budnick is the Director of Public Policy & Government Affairs for Zendrive. He introduced the “Vision Zero” concept to the U.S., which posits that all traffic deaths and serious injuries are preventable. As part of New York City Mayor Bill de Blasio’s transition team, he helped develop the first Vision Zero policy in America. Noah has championed policies to improve communities through the introduction of safe city speed limits, protected bike lanes and “play streets." He also conducted the first U.S. research to demonstrate the “safety in numbers” effect – that increased numbers of walkers and bikers lead to fewer casualties. Before Zendrive, Noah served as Executive Director of the San Francisco Bicycle Coalition and Deputy Director of Transportation Alternatives in NYC. His roots in active transportation go back to high school, where he convinced his physical education teachers to let him start a mountain biking club in lieu of going to gym class.

Noah Budnick is the Director of Public Policy & Government Affairs for Zendrive. He introduced the “Vision Zero” concept to the U.S., which posits that all traffic deaths and serious injuries are preventable. As part of New York City Mayor Bill de Blasio’s transition team, he helped develop the first Vision Zero policy in America. Noah has championed policies to improve communities through the introduction of safe city speed limits, protected bike lanes and “play streets." He also conducted the first U.S. research to demonstrate the “safety in numbers” effect – that increased numbers of walkers and bikers lead to fewer casualties. Before Zendrive, Noah served as Executive Director of the San Francisco Bicycle Coalition and Deputy Director of Transportation Alternatives in NYC. His roots in active transportation go back to high school, where he convinced his physical education teachers to let him start a mountain biking club in lieu of going to gym class.