Vehicle location data offers new insights for uncovering commercial use of a personal vehicle.
Insurance carriers know that commercial use of a personal vehicles happens. And, they know the numbers: Rating issues like commercial use cost the industry over $16 billion a year in loss premiums. Yet carriers tell me they have hit a wall in fighting commercial use rate evasion. What to do? Don’t give up; use vehicle location data to spot signs of commercial use.
Commercial use of a personal vehicle happens when carriers insure the vehicle as personal, but the policy holder uses the vehicle for business. And those billion in losses rack up because the rates for commercial vehicles are much higher than rates for personal vehicles. Some carriers even report commercial use adds up to more losses than rate evasion. So how do carriers determine if a personal vehicle is being used for commercial purposes?
We decided to put DRN’s vehicle location data to work looking for signs of commercial use. The vehicle location data includes 4.2 billion license plate images collected nationwide. And, the license plate images often include vehicle images, mostly of vehicles parked on a street or in parking lots. These vehicle images typically have a good view of the rear of the vehicle. Our tests looked at vehicles insured as personal (cars, SUVs, vans, trucks, etc.) and we used the images to identify signage or commercial grade accessories on the vehicles.
What did the vehicle location data show?
- Signage or commercial accessories on a car, SUV, or van were very rare. So these are not worth looking at unless you already suspect an issue or have another reason to look at them.
- Signage or commercial accessories on a trucks were more common including commercial grade toolboxes and ladder racks. A few had signage or other items on the back such as trade tools or supplies.
Deciding whether commercial grade toolboxes or ladder racks constitute commercial use would require more investigation, but I believe it is a pretty good indicator. And, signage certainly does indicate commercial use. But why do people keep committing rating fraud? Studies show that up to two-thirds of consumers believe it happens because they believe they can get away with it. So if you are interested in reducing your exposure to this type of abuse, just look at the pictures!