Telematics refers to the use of technology to track driving behaviors. It is often utilized by companies that employ drivers, such as delivery services or ridesharing businesses. In recent years, the use of telematics has also become more widespread among insurance companies.
How Do Telematics Devices Work?
If your car insurance company uses a telematics device, they will collect specific data about your driving habits from the device to manage your policy more appropriately. The device will typically be plugged into your vehicle’s onboard diagnostic port, where it will keep track of your total driving time, miles driving, speed, and other tendencies.
Currently, several major injurers are using telematics devices for clients with car insurance policies. Some of the insurers currently using telematics include Nationwide, Safeco, Travelers, and Progressive.
How Is Telematics Data Used?
Data from a telematics device may be used in several ways, including:
- Determining insurance premiums – Most insurance companies use information about speeding, acceleration, braking, and other driving behaviors in the determination of their client’s insurance premium amounts. Other factors that may be taken into consideration when determining premiums include the number of miles driven, the driver’s most frequent destinations, and the times of day or night the driver is typically on the road.
- Claims management – Telematics devices can inform the car insurance company of an accident as soon as it occurs, which expedites the claims process considerably. The data collected by the telematics device can also be useful in determining the cause of the accident to process the claim.
Insurance companies have begun using telematics devices for fairness and accuracy. Rather than pooling all drivers into certain price points based on their basic characteristics, telematics devices allow car insurance companies to base the rate they charge on the habits of the individual driver. This ensures that the drivers who truly pose the biggest risk to the insurance company are the ones paying larger premiums. It also allows insurance companies to reward drivers for improving their driving habits.
Benefits of Telematics in Insurance
Although some drivers may be hesitant to provide insurance companies with so much detailed information about their whereabouts and driving habits, there are many potential benefits available from the use of this technology. Some of the benefits of using telematics include:
- Lower premiums – For drivers who operate their vehicles safely, the use of telematics will usually result in a lower premium than the use of pooling based on driver characteristics.
- Safer driving – When drivers know their habits are being monitored and that their habits could affect their premiums, they are more likely to drive safely. This leads to fewer accidents and injuries on the road.
- Improved management of claims – When accidents do occur, a telematics device can speed the processing of the claim and help to ensure that the outcome is fair for everyone involved.
Lower Your Insurance Premiums with Telematics
If you are interested in using telematics to qualify for a lower premium, a qualified insurance agent can help you take the necessary steps. Contact Couri Insurance Agency today to learn more about this option or to discuss your insurance needs in detail.
