Mileage verification is crucial in various aspects of auto insurance, from pay-per-mile plans to usage-based pricing and traditional policies. While OBD-II dongles have been utilized for this purpose, they present several shortcomings. Discover why OBD-II hardware falls short and explore how software-driven alternatives offer a superior solution for precise mileage tracking.
The Drawbacks of OBD-II Dongles for Mileage Verification
On-board diagnostics (OBD) dongles are indeed versatile tools for vehicle tracking and diagnostics. However, relying on them for mileage verification is far from ideal due to several significant limitations:
-
Mileage Inaccuracy: Contrary to common belief, OBD dongles do not directly access a vehicle’s precise odometer reading. Instead, they employ a calculation method to estimate mileage. This estimation is based on location data and the start and end points of driving trips. As you might expect, deriving mileage from location and trip data introduces inherent inaccuracies. Furthermore, if the dongle incorrectly registers the beginning or conclusion of a journey, minor discrepancies can escalate into substantial errors in mileage reporting.
-
Inconvenience and Reliability Issues: OBD-II dongles, being hardware devices, necessitate correct installation and consistent usage. Policyholders must wait for device delivery and invest time in physically installing it in their vehicles. This cumbersome onboarding process can deter potential customers, even discouraging them from requesting initial quotes. Once installed, these devices are prone to malfunctions due to loose connections or accidental dislodging by vehicle occupants. Additionally, OBD dongles can sometimes draw excessive power, leading to battery drain and potential vehicle battery failure.
-
Vulnerability to Tampering: Beyond unintentional failures, there’s a risk of deliberate mileage manipulation. Policyholders seeking to lower their premiums might disconnect the OBD device before embarking on long drives. While the system may eventually detect tampering, it’s often after a delay. By the time the dongle is reconnected, a considerable distance – perhaps tens or hundreds of miles – could have been driven unrecorded. Retrospectively determining this unreported mileage, and consequently, the financial losses (premium leakage) to the insurance company, becomes virtually impossible.
-
Privacy Concerns: In an era of heightened awareness regarding consumer privacy, gaining customer trust is paramount for insurance providers. Policyholders often harbor skepticism towards continuous tracking, and justifiably so. OBD devices function as opaque “black boxes,” offering limited transparency regarding the types of data collected, how this information is transmitted to the insurer, and its ultimate usage. This lack of clarity can erode customer confidence and hinder adoption.
-
High Operational Costs: OBD-II dongles represent a substantial cost burden. Businesses must procure the devices, manage shipping to policyholders, and handle replacements due to damage or loss. If customers switch insurance providers before the initial hardware investment is recouped, profitability suffers, undermining the intended financial benefits of usage-based insurance models.
The Superiority of APIs for Mileage Verification
As modern vehicles become increasingly connected, reliance on hardware solutions for essential functions is becoming less necessary. Software-based alternatives, leveraging APIs, offer a streamlined and more effective approach. Smartcar exemplifies this shift, providing a pure software solution through API technology, perfectly suited for mileage verification in the auto insurance industry.
-
Precise Mileage Readings: APIs directly retrieve a vehicle’s actual odometer reading. This is not an estimated value based on trip data and location, but the definitive mileage recorded by the car itself. This accuracy enables insurance businesses to offer precise pricing and underwriting, eliminating customer disputes arising from inaccurately reported mileage.
-
Effortless User Experience and Enhanced Reliability: Smartcar’s onboarding process is remarkably simple, requiring just a few clicks within a mobile or web application. Customers bypass the need to wait for device shipments or struggle with physical installation. Instead, they simply log into their existing vehicle account and grant permission for data access. This eliminates concerns about incorrect setups, loose connections, or battery drain issues, ensuring a seamless and reliable user experience.
-
Tamper-Resistant and Secure: Utilizing a car API empowers insurance products to regularly and automatically access a vehicle’s true odometer reading. This proactive data retrieval makes mileage fraud exceedingly difficult, if not impossible. Customers cannot manipulate or conceal mileage data, safeguarding against premium leakage and ensuring accurate billing.
-
Prioritizing Privacy and Transparency: API-based solutions prioritize transparency and user privacy through granular permission controls. Customers are explicitly shown the exact data points requested by the insurance application (e.g., odometer, location, fuel level). They retain control, able to grant or deny access to each permission with a simple click, fostering trust and user confidence.
-
Cost-Effective and Scalable Implementation: Smartcar’s straightforward SaaS pricing model offers scalability and adaptability to business needs. Resources are not tied up in hardware procurement, shipping logistics, replacements, or repairs. This cost-efficiency allows companies to focus on core objectives: enhancing customer experiences and developing innovative insurance products.
📱 Exploring Car APIs: A Beginner’s Guide
Curious about the practical application of car APIs? Wondering why APIs are emerging as the preferred alternative to OBD dongles and smartphone telematics?
More importantly, is a car API platform the optimal choice for your specific needs?
👉 Discover real-world examples of applications built with car APIs
Software-driven solutions are revolutionizing mileage verification for insurance companies, making the process more accurate, efficient, and user-friendly. Interested in exploring the capabilities of the Smartcar platform further? We encourage you to request a demo to learn how we can assist you in implementing cutting-edge mileage verification solutions.
