A small insurance startup, Root, has launched a car insurance specifically designed for Tesla vehicle owners that reduces the price of the policy the longer the vehicle runs in autonomous mode, on the basis that this mode is much safer than driving manually. Thus, drivers who spend a lot of time on the highway or in conditions where they can activate the autonomous mode will pay less insurance.

The idea is based on the fact that a vehicle is increasingly a connected platform, a smartphone on wheels from which we can obtain a constant flow of information. To sign up for a Root policy, which typically offers much lower prices than its competitors, you must download an app that allows the company to access GPS, accelerometers and gyroscopes data on your  smartphone, making it possible for the company to evaluate your driving.

After about two to three weeks driving with the app, enough for the average driver to forget about the app and go back to his or her typical driving habits, the algorithm has created a user profile that includes how much time the vehicle is in use, frequent destinations, whether drivers change lane excessively, their driving speeds, to what extent they respect traffic rules, or if they use their smartphone while driving, among many other things. After that period, the company claims it stops monitoring. Drivers receive a report on their driving, with some 30% of applicants rejected, that allows the insurer to reduce its prices by accepting only drivers they consider to be low risk and thereby increasing the average quality of their customer pool, which in the end means fewer payouts.

Root is operating at a very small scale: so far, only in Ohio, where the likelihood of finding many Tesla owners is probably low. But the idea of a context-based insurance policy that adjusts its price depending on the circumstances or our driving is undoubtedly original, and could be applied to many other situations from an insurance perspective. The company has not yet contacted Tesla, but believes that even without using vehicle data, its machine learning algorithms can deduce at what times the car is driving in Autopilot. Root wants to reach an agreement with Tesla to use data generated by the vehicle itself, which would allow even greater precision. Although Tesla has not yet commented, it has previously shown an interest in informing insurers about the added safety of its Autopilot. Likewise, the company has been open to the possibility of sharing the data generated by its vehicles with government agencies or with other companies and nothing seems to indicate that it would oppose the owners of its vehicles if they freely decide to share their driving data in exchange for a cheaper insurance policy.

By Enrique Dans

See full story at www.forbes.com