Car technology is changing rapidly. some of the innovations that are happening right now when it comes to cars, includes self-driving vehicles, biometrics, augmented reality and yes, even cars that talk to each other. In this post, we’re going to take a deep dive into another technology — telematics — and what you should know about this information-sharing tool as both a driver and an auto insurance policyholder.
What is telematics?
What in the world is telematics? Telematics is one of those words that can be a little bit confusing to grasp, but in reality, the concept is pretty simple. Telematics are used in many industries as a telecommunications tool to share information. In the world of car insurance, telematics is used to capture data and information via a tracking device in a vehicle or through an app. This information – how much you drive or how safely or recklessly you drive — is captured over a specific length of time and then shared back with your car insurance company to help determine pricing for your policy.
In this blog post, we will share some information on what exactly is tracked when you opt in for telematics on your policy — mileage-based telematics looks at how often and far you drive, and behavior-based telematics looks at how you drive — and the pros and cons you might consider when wondering whether to opt in for telematics. You may also see these types of policies referred to as usage-based insurance, where the cost of a policy is based on a driver’s habits.
How does it work?
Telematics work by connecting a device to your car or through a mobile app to track either driving behavior or other driving patterns, like how often or far you drive. Telematics provides insurance companies with information about policyholders and their driving habits that an online quote simply cannot — it is real-time information on how an individual drives.
You can see how this would be beneficial for an insurance company, but how does using telematics benefit you as an individual? Many insurance companies offer an incentive to participate in a telematics program with a discount, and then opportunities for further discounts when good driving habits are reported back through the device. So, if you’re confident in your driving skills and behaviors, telematics might save you some money.
Factors it takes into consideration
A telematics device has access to a number of factors, including the number of miles driven, focused driving, speed and how often there is rapid acceleration, how turns are taken, hard braking, or the time of day when driving. Some telematics devices installed in cars can even tell if the airbag has been deployed.
Pros of telematics
Don’t drive a lot? Good driving habits? You might benefit from opting into telematics. Since you are giving your insurance company an inside look at how you drive far beyond what they get from a traditional quote process, there’s an opportunity for you to get rewarded with a fair and often lower price by opting in.
Cons of telematics
Tracking device? For some, just the idea of telematics is enough to make them leery about privacy concerns since telematics collects GPS location and other personal information. Outside of privacy concerns, if you know you tend to surpass the speed limit or find yourself braking hard a lot, using telematics may actually lead to an increase in insurance costs for you.
Who should consider a telematics program?
With mileage-based telematics programs, you are essentially choosing to pay for insurance by the mile. If you drive infrequently and a long trip is few and far between for you, you might be a good candidate for mileage-based telematics. Allowing your insurance to track your mileage could ultimately lead to a discounted policy.
For behavior-based telematics, think about the factors that telematics technology takes into consideration that we mentioned above — everything from hard braking to speed to the time of day you usually drive. If you know your driving habits are generally more cautious and would perform well when being monitored by telematics, you are probably a good candidate to try it out and see if it can positively impact your rate. If you have an inkling that your driving would not be seen positively through a monitoring tool, telematics could mean a higher rate on your policy.
Can telematics increase your insurance rate?
There are many factors that can impact your car insurance rate, from driving record and your credit score to the area code in which your vehicle resides, a car being on the street versus parked in a garage can make a difference in rate. The driving habits that are collected via telematics can also cause your auto insurance rate to be lower or higher depending on driving behaviors that are collected. For certain drivers with bad driving habits, insurance premiums can increase.
Is telematics worth it?
Specific to insurance, deciding whether to join a telematics program to see if you can qualify for a lower and fairer price on your insurance requires you to take an honest look at your driving behavior and assess how telematics may or may not benefit you and your policy. Everyone’s situation is different. Of course, we always encourage safe driving and hope that all our policyholders drive safe behind the wheel.
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