Telematics is a technology that is gaining more traction among car insurance companies. Car insurance providers use this technology in the calculation of customers’ premiums, as well as in the processing of claims. For some policyholders, the use of telematics leads to lower health insurance premiums.
Car insurance companies use telematics devices or applications to collect data related to your specific driving behaviors. This technology is also used by companies that offer ridesharing or delivery services.
In most cases, car insurance companies that utilize telematics will provide you with a device that can be plugged into a port in your vehicle. The device will collect data whenever you drive your car. All data is transmitted wirelessly to your insurance provider.
Telematics is currently available from several major insurers, including Progressive, Safeco, Nationwide, and Travelers. This technology will likely be utilized even more frequently in the future.
What Type of Data Is Collected?
Car insurance companies use telematics to collect a range of different types of data. For example, the insurance provider may track your speed, the total number of miles you travel, and the destinations you visit most frequently. Other driving behaviors, such as braking and cornering, may also be monitored. If you are curious about the exact data your insurer plans to collect, simply ask about the details of their telematics program.
How Data Affects Policyholders
One of the main ways in which car insurance companies use telematics data is the calculation of risk and premiums. This data is specific.to each policyholder’s individual driving habits, which means the insurance provider can get a more accurate idea of how likely the policyholder is to be involved in an accident. Policyholders who drive safely will enjoy lower premiums, while those who engage in unsafe driving behaviors will see their premiums increase.
If you are involved in an accident, your insurance provider can also use telematics to improve the claims process. In many cases, the insurance provider will even receive a real-time notification from the telematics device when the crash occurs.
Telematics offers several potential advantages for insurance providers and policyholders alike. Telematics allows car insurance companies to calculate more reasonable premiums for each driver based on their actual risk, as opposed to an estimated risk based solely on demographics. For drivers who take care when behind the wheel, the use of telematics usually leads to a lower premium than the driver would have received under the traditional demographic-based system.
In addition, because drivers who subscribe to an insurance policy that involves telematics are aware that they are being monitored, they are more likely to drive safely in order to save money. This reduces the number of total accidents, which protects people on the road and lowers costs for the insurance company.
Learn More about Telematics
If you believe a car insurance policy with telematics would be beneficial for you, the first step is to talk to a qualified insurance agent. Contact Andreotti Agency today to speak about your coverage needs with a member of our team.