Mileage verification is crucial for various auto insurance products, from pay-per-mile to usage-based pricing. While OBD-II dongles are often used for this purpose, they present significant shortcomings. This article explores the limitations of Obd2 Mileage Trackers and introduces a superior software-based solution.
The Drawbacks of OBD2 Mileage Trackers for Accurate Mileage Verification
On-board diagnostics (OBD) dongles, while versatile for vehicle diagnostics, fall short when it comes to reliable mileage verification for insurance purposes. Here’s why they aren’t the ideal solution:
Inaccuracy in Mileage Tracking
Contrary to popular belief, OBD2 dongles do not access a vehicle’s precise odometer reading. Instead, these devices estimate mileage by approximating a car’s location and tracking trip start and end points. This method of inferring mileage from location data is inherently prone to inaccuracies. Errors in detecting trip beginnings or endings can compound, leading to substantial discrepancies in reported mileage.
Inconvenience and Potential for Failure
OBD-II dongles require manual installation, creating inconvenience for policyholders. Customers must wait for device delivery and then spend time physically installing it in their vehicles. This cumbersome onboarding process can deter potential customers right from the quote request stage. Furthermore, these hardware devices are susceptible to malfunctions. Loose connections or accidental dislodging by the vehicle owner can lead to device failure. In some instances, OBD dongles can even drain a car’s battery, causing further inconvenience.
Vulnerability to Intentional Tampering
Beyond unintentional failures, OBD2 dongles are also susceptible to deliberate tampering for mileage fraud. Policyholders seeking to lower their premiums might disconnect the dongle before long trips. While systems may eventually detect tampering, significant mileage could be accumulated before reconnection, leading to undetected premium leakage for insurance companies. The exact mileage driven during the period of disconnection remains unverifiable.
Privacy Concerns and Data Transparency
In an era of heightened privacy awareness, consumers are increasingly wary of constant tracking. OBD devices, functioning as “black boxes,” offer limited transparency regarding data collection, transmission to insurers, and data usage. This lack of clarity can breed mistrust among policyholders concerned about their personal data privacy.
High Operational Expenses
OBD-II dongles incur considerable costs for insurance businesses. Expenses include device procurement, shipping to customers, and replacements due to damage or loss. If a customer switches insurers before the hardware cost is recouped, it directly impacts profitability, making OBD dongles a less economically sound long-term solution.
API-Based Solutions: A Superior Approach to Mileage Verification
As vehicles become increasingly connected, software-based solutions offer a more effective alternative to hardware-dependent methods. Car APIs, like Smartcar, provide a robust and accurate mileage verification solution for the auto insurance industry.
Precise Mileage Readings
APIs directly access a vehicle’s actual odometer reading, eliminating estimations based on location or trip data. This direct access ensures precise mileage reporting, leading to accurate insurance pricing and underwriting. Customers benefit from fair premiums based on verified mileage, reducing disputes arising from inaccurate reporting.
User-Friendly and Reliable Operation
API-based onboarding is streamlined and user-friendly, typically requiring just a few clicks within a web or mobile app. Customers avoid the wait for device delivery and the hassle of physical installation. By simply logging into their existing car account and granting necessary permissions, users enable seamless data sharing. This software-driven approach eliminates concerns about incorrect installation, device disconnections, or battery drain issues.
Tamper-Resistant Data Acquisition
Car APIs facilitate regular and automated odometer readings directly from the vehicle. This consistent data access makes mileage fraud significantly more difficult. Policyholders cannot manipulate or conceal mileage data, safeguarding insurers against premium leakage and ensuring fair policy pricing.
Prioritizing Privacy and Transparency
API platforms with granular permission controls prioritize user privacy. Customers are clearly informed about the data being requested by the insurance application (e.g., odometer, location, fuel level). They retain control, with the ability to grant or deny specific permissions, fostering trust and transparency in data sharing.
Cost-Effective and Scalable
API solutions offer predictable SaaS pricing models that scale with business needs. Insurers avoid the capital expenditure and logistical complexities associated with OBD dongles, including hardware costs, shipping, and replacements. This cost-efficiency allows for greater investment in enhancing customer experiences and core business operations.
📱 Building apps for cars: A beginner’s guide to car APIs
What does a car API look like in action? Why should you connect to cars with an API instead of OBD dongles or smartphone telematics? More importantly, is a car API platform the right choice for you?
👉 Learn from real examples of apps built with car APIs
Software-driven solutions are revolutionizing mileage verification for insurance companies, offering accuracy, convenience, and cost-effectiveness. To discover more about the Smartcar platform and its API-driven approach, request a demo today.
