After several years of decline, auto insurance prices have risen again last year, by an average of 8%, to the dismay of cash-strapped drivers. However, new technology can actually save motorists hundreds of pounds in premiums by making driving safer.
Insurer Swiss Re and technology group Here have projected that premiums in the 14 largest car markets in the world are expected to drop by $20bn (£13.8bn) by 2020. Meanwhile, a survey by The Observer noted that two versions of the Ford Focus – one equipped with an automatic braking system that senses imminent impact, and one without – can command quotes that differ by almost a third.
In 2015, 2.63 million new cars were registered in the UK, and over 1.5 million had self-activating safety features, such as collision warning and lane departure warning systems. These systems reduce the likelihood of a crash, and eventually, the cost of motor insurance premiums.
The autonomous emergency braking (AEB) system uses a laser, radar, or camera to automatically stop a car if it senses there is going to be a collision. According to the Euro NCAP and Australasian NCAP, AEB lessens rear-end crashes by up to 38%.
Thatcham Research estimates that AEB can lower premiums by around 10%. Meanwhile, auto insurance provider esure offers a 5% discount on premiums if the vehicle is equipped with AEB.
On the contrary, the savings in insurance premiums could offset by the cost of the technology itself. While included by default in most high-end models, it may cost between £180 and £1,300 as an optional extra for older and lower-end model vehicles.