If you’re interested in buying ancar insurance policy that includes vehicle telematics, you might be asking yourself, What are telematics anyway?
Telematics has been called the next big thing in the insurance industry for years, and the main reason it has taken this long to become mainstream is that the technology hasn’t been up to par until very recently.
While telematics isn’t exactly new, it’s gaining in popularity as more drivers become aware of how insurance companies use this technology to save money and keep drivers safe.
Here’s everything you need to know about telematics and insurance: what they are, how they work, and why they’re important to understanding car insurance’s future.
Why Does Insurance Need Telematics?
Much like wearable technology can help employers keep track of employees’ fitness, telematics and insurance work hand-in-hand. When your car or truck is equipped with a device that can monitor how safely you drive, insurance companies can reward safe drivers by giving them better rates.
These devices are much more accurate than other methods of determining risk, such as driving history. And because they’re not based on assumption, they don’t discriminate against high-risk drivers who haven’t had accidents or tickets in years.
Telematics is also a great way for parents to keep tabs on their teen drivers; unlike traditional car insurance providers, many firms offer discounts if parents sign up for tracking services and report unsafe behaviours.
A third-party telematics system allows insurers to consider all of these factors. It’s convenient for drivers to get lower premiums and companies to get better data while keeping their clients happy with lower rates. And it can be a very useful tool in making sure that everyone is operating as safely as possible on the road.
Ways Insurance Companies Are Using Telematics Today
An insurer can build a profile of what type of driver you are by analysing driving data. That information helps them find a policy that matches your risk profile—and gives you more control over your premium in some cases.
An insurer can provide incentives for good behaviour, like extra discounts if you are a more careful driver. They can also offer warnings for risky behaviours, like speeding tickets or driving late at night. Progressive telematics insurance companies have been using these techniques for years to keep their customers safer behind the wheel and reduce their accident claims by 35 percent over four years.
By choosing to participate in a program like Snapshot or Geolocation, you can access these benefits. Insurance companies are always looking for new ways to control risk, which gives them an incentive to find drivers who will pay lower premiums. By participating in programs like Snapshot or Geolocation, you’re showing that you are a low-risk driver.
This can lead to big savings on your policy—or even better terms on your current one. You may have some questions about privacy concerns when sharing your driving data with insurers.