In recent years, more car insurance companies have been using telematics to track the behavior of their clients and better determine policy premiums. However, for many consumers, the term “telematics” is still a mystery. Today, we will discuss the basics of telematics and how it could affect your car insurance policy.
What Is Telematics?
Telematics is a technology that collects specific data about the way you drive. Some of the data collected may include your speed, miles driven, total driving time, and the times of the day or night you typically spend on the road. Depending on the situation, your insurance company may use a plug-in device, black box, or mobile app to collect this information.
Not all insurance companies are using telematics. However, this option is already available from several large, well-known insurers including Progressive, Travelers, Safeco, and Nationwide.
How Do Car Insurance Companies Use Telematics?
The data provided by a telematics device is most often used in the determination of the client’s car insurance premiums. This allows the car insurance company to take the client’s specific driving behaviors, such as braking, acceleration, and speed, into account when calculating the premium. The car insurance company may also incorporate other factors, such as the time spent on the road, into the equation.
Insurance companies may also utilize they collect from a telematics device to manage claims. For example, if your insurance company is using telematics to track your driving behaviors, they will be aware of an accident as soon as it occurs. The information collected by the device can also be used to determine the outcome of the claim.
Why Do Insurance Companies Use Telematics?
In the past, most policy premiums were determined based on basic characteristics of different drivers, such as their claims history or age. These factors were used to place drivers into different groups according to the risk they were estimated to pose. However, pooling does not take the behaviors or level of responsibility of individual drivers into account as well as telematics. With telematics, insurance companies can base their premiums on the actual driving behaviors of each individual, allowing for a more equitable system. Likewise, when drivers know their behaviors are affecting the cost of their insurance, they are more likely to drive safely on the road. This leads to fewer accidents and fewer claims for the insurance company.
Benefits for Consumers
At first glance, telematics may see, invasive to some consumers. However, in many cases, the use of telematics can actually be beneficial to policyholders. If you drive safely, for example, you may enjoy lower premiums than you would have had under traditional group-based calculations. In addition, knowing that your driving habits are being monitored may encourage you to drive more safely than you normally would.
If you are involved in an accident while connected to a telematics device, you can also rest assured that your car insurance provider will be made aware of the accident in real-time. The data collected by this device can also be used to make sure the claim is decided fairly.
Get Car Insurance with Telematics
If you are interested in purchasing a car insurance policy that includes telematics, you need to contact an experienced insurance agent to help you find the right policy for your needs. To begin your search for the perfect policy, please contact Wolfgram Insurance today.