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FICO’s "Safe Driving Score" and the Future of Auto Insurance

Colin GrubbNov 2, 2016


Let’s say you’re a safe driver. Not only have you been accident free, but you also always obey the speed limit. You’re the kind of person who actually comes to a dead stop at a stop sign in a deserted neighborhood in the middle of the night. What if your good motoring habits could pay off in the form of lower auto insurance rates?

How would your insurance company monitor such behavior? The answer, as it is does more and more these days, lies in your smartphone.

Traditionally, your auto insurance rates are based on your FICO score. In fact 95% of insurance companies do this. FICO has now teamed up with eDriving, a worldwide leader in online driver training, to develop a “safe driving score,” much like FICO’s well-known credit score.

Using this, auto insurers would be able to base your rates on your actual driving ability and habits, rather than your credit score. The information will be gathered using telematics.

Vehicle telematics has been around for a few years. It is basically a system that combines wireless communication and GPS tracking in order to monitor and record the location, behavior and movements of a given vehicle.

This was of particular use to businesses operating a fleet of vehicles, enabling them to monitor location and activity of drivers.  These generally consisted of proprietary devices that communicated wirelessly with operators using web or PC-based software.

The technology now exists to do the same thing over smartphone. eDriving already employs an app that does just this as part of their driver training programs. The app can track your speed and rates of acceleration, braking and cornering, etc. FICO will then use this data to generate a score.

Several insurers already use telematics to determine rates, albeit without a smartphone app and associated FICO score. These customers are currently saving more than 20%. Given the ubiquity of smart devices and our ever-increasing engagement with apps in our lives, it’s clear that usage-based telematics-driven auto insurance will continue to grow. In fact, some researchers predict it will become the dominant rate calculation model by 2020.

So the next time you’re about to come to a rolling stop at that stop sign in the middle of the night, take a look at your smartphone lying on the passenger seat and think twice.

In the meantime you can still get the best auto insurance rates and customer service from our advertising partner Esurance. Esurance offers a host of excellent discounts as well as cutting edge online tools and mobile apps that are second to none.