General Motors Enters the Auto Insurance Business - Investopedia

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General Motors has launched an auto insurance platform through its subsidiary OnStar. The auto manufacturer is taking advantage of the new age of automotive data provided by cars that are more connected than ever. General Motors is one of several companies in the auto industry to enter the insurance space.

Key Takeaways

• General Motors plans to start offering auto insurance in early 2021 through its OnStar subsidiary.
• OnStar collects data on driver behavior, which can be used to personalize insurance rates.
• Tesla has also unveiled plans to offer auto insurance, and Ford has partnered with Allstate to allow some customers to share their driving data as a factor in setting their rates.

Telematics May Help Drive Down Insurance Costs for Some

Telematics has been around for a long time now, but more and more insurers are using it to gather data about consumer driving habits. 

In the past, vehicle owners could connect a device—downloading a mobile app is more common now—that would keep track of all sorts of information while they drove, including speed, acceleration, braking, fuel consumption, idling, and more.

Insurance companies would use this data to offer discounts based on how safely customers drive. Exhibiting good driving behaviors over a period of time could show the insurer that you’re a lower risk, which could result in a lower rate. 

With vehicles continuing to become more connected and automated, it’s getting easier for insurers to access that data and make better decisions on premiums.

How GM’s New Insurance Is Different

General Motors isn’t the first auto manufacturer to get into the insurance business. Tesla announced in 2019 that it would offer its own auto insurance product in response to reports that some of its customers were paying higher rates. Currently, its policies are available only in California.

Ford is another automaker that’s capitalizing on improved telematics technology and connectivity. Unlike GM and Tesla, Ford doesn’t offer its own insurance policies. Rather, it has partnered with Allstate to allow customers with newer models to share data via embedded modems and participate in Allstate’s Milewise program.

While GM’s new insurance offering won’t be available to the general public until early next year, its integration with OnStar offers a more streamlined service than Ford's. Also, the service appears likely to be available to more than just GM customers, making it more accessible than policies offered by Ford or Tesla.

GM doesn’t say that vehicle owners must have an OnStar subscription to apply for a policy, but OnStar members will be eligible for discounts.

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General Motors Enters the Auto Insurance Business - Investopedia
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