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On-demand insurance lets you purchase coverage wherever and whenever you want on your smartphone or other device, especially when your property or possessions are in use or at risk and require a buffer against accidents or loss. You only pay for your policy when your plan is active.
While on-demand insurance isn't for everyone, and shouldn't be used to replace traditional insurance in many cases, there are some situations where an as-needed policy may be helpful. Here's what you need to know.
How On-Demand Insurance Works
On-demand insurance allows you to turn on and off your insurance as needed—at any time during the day or night and for as long as necessary. You only pay for protection when the need arises, instead of paying for continual coverage when you don't need it.
The process to activate and deactivate coverage is fast and easy and usually done via a smartphone app or other technology. Coverage is typically subscription-based with customized options, variable pricing and flexible terms. You can purchase a policy online without directly interacting with an agent or broker.
Right now, use of on-demand insurance is limited: It makes up less than 1% of the global market, according to KPMG. However, expanding options and a better understanding of this type of coverage means the popularity of on-demand insurance is likely to grow. Examples of on-demand coverage include:
Sharing Economy Coverage
On-demand coverage can be a good option for someone who needs regular insurance coverage all the time and additional coverage occasionally for gig work.
Say, for instance, you're a Lyft or Uber driver. Your personal auto insurance covers you when you're not using your car for business, and the ride-hailing company's insurance typically covers you when driving for the service. However, when you're logged in to the ride-hailing app but are waiting for your next passenger, you may have a potential gap in coverage. During this time, on-demand insurance can kick in.
Periodic Insurance
This type of on-demand insurance goes into effect when you're traveling in the U.S. or abroad, and is used to cover unexpected expenses, such as expenses that your standard medical plan may not cover. For example, if you're traveling to Dubai, you'll need a minimum of $100,000 in emergency medical coverage and $50,000 for medical evacuation, which your existing insurance may not provide. On-demand insurance can fill the gap.
Likewise, let's say you're a freelance photographer on assignment overseas. Your current homeowners policy covers your camera up to $3,000, but not your photos. On-demand insurance lets you add this extra coverage for only the time you're away, then turn it off once you arrive safely back at home.
Where Can You Get On-Demand Insurance?
Although the on-demand insurance market is expected to grow by nearly 30% by 2026, according to a report by Acumen Research and Consulting, many traditional insurers do not yet offer on-demand insurance. Instead, there are currently a small number of startups that are driving momentum, including:
- Verifly: Verifly provides on-demand insurance in 49 states, specifically for drones weighing 15 pounds or less. They also offer coverage for items such as cameras and construction tools.
- Trōv: This company offers on-demand insurance for your valuables, such as televisions, smartphones, cameras and sports equipment. Trōv is only currently available in Australia, the U.K. and the state of Arizona.
- Metromile: Metromile is pay-as-you-go auto insurance. It's popular for infrequent drivers.
- Slice: This company offers vacation rental insurance in 13 states for Airbnb, HomeAway, Vrbo and FlipKey.
- Bind Benefits: This company offers on-demand health insurance that allows customers to design their own health care coverage based on their current needs.
Should You Get On-Demand Insurance?
On-demand insurance may not be the first choice for many people, but in certain circumstances it can come in handy. It is best for those who:
- May be exposed to risks not covered by their traditional insurance policy.
- Need temporary insurance and don't want to pay for more expensive traditional insurance.
- Need additional coverage on top of what their insurance offers.
For consumers who don't regularly need coverage or don't want to pay an annual premium for sporadic coverage, on-demand insurance may be a good solution. But consider your insurance needs carefully before reducing or ending your traditional coverage.
Insurance Made to Order
On-demand insurance isn't for everyone. It doesn't replace traditional insurance, but can fill in gaps in a standard policy or provide temporary coverage by allowing you to simply turn it on and off when needed.
Whether you use traditional insurance, on-demand insurance or both, it's important to have insurance so if bad luck comes your way, you can transfer the cost of repair or replacement to your insurance company instead of paying out of pocket.
In states where it's allowed, insurers may use insurance-based credit scores to help set premiums. To improve your chances of getting the best rates, check your Experian credit report and score for free.