Most drivers don't think much about getting from one point to another. However, people will have to be more careful while driving if they are under any trip-based insurance unless they want to pay more for the same trip.
Using information such as accident patterns, geographical characteristics, weather and more, Allstate has proposed assigning "risk values" to stretches of road. Based on the accident history at an intersection, turning left might be deemed riskier than going straight. Such factors are now being considered before believing some roads are more difficult than others and, therefore, determining the rate of auto insurance plans.
Insurance costs would be higher on road segments with higher risk values. According to the patent, the purpose is to reward the idea of mitigating risks. That is, one could end up choosing trips based on your budget.
A faster route to your destination may be riskier and more expensive than a slower route recommended by your insurer. There's a trade-off between convenience and burning through your risk units.
The Travelers Insurance patent application describes a similar system, proposing "risk zones" - hot spots of accidents, police activity, insurance claims and other issues - where drivers might be charged a surcharge.
The patent applications indicate how auto insurance pricing may evolve, even though the specific technology is yet to emerge.
For most drivers who can extend their risk units over a long time, purchasing car insurance as to risk units would be more beneficial. For example, low-mileage motorists would be ideal candidates in this case.
Alternatively, insurers could still sell traditional policies and offer trip-based policies as an incentive to improve driving. It might make sense for insurers to reward drivers who consistently choose safe routes without penalizing those who don't.
Many companies offer such programs that track behaviors like speeding and hard braking to refine drivers' rates. Customers who try out usage-based insurance may realize its benefits and find it easier to transition to trip-based pricing.
The biggest threat to implementing trip-based insurance is the challenge of gathering enough information about roads to accurately rate their risk level, as Allstate has been considering.