What Is Telematics?
Telematics, also known as usage-based insurance or “Pay How You Drive” car insurance, tracks driving habits, including driving distances, speed, braking behaviors and more. That information is used by an insurance company to help customize your auto insurance premium.
If the thought of having an insurance company monitor your driving makes you nervous, remember, the benefits could far outweigh your concerns – especially if you and the people on your auto policy drive safely. And if you already are a careful driver, you know that maintaining a safe speed, keeping your distance and not texting while you drive are all great ways to help stay safe on the road.
Telematics technology has improved significantly in recent years. If you haven’t considered telematics lately, it’s worth a fresh look.
How Does Telematics Insurance Work?
No matter the type of telematics program, insurers track policyholders’ driving behavior in real time. In some cases, you can pick the telematics technology that you would like to use. Keep in mind that different devices can track different things. For example, a smartphone app can track your phone use while driving, but a plug-in device cannot.
Telematics car insurance programs collect data to rate your driving safety and/or track your mileage. The programs collect data related to how you drive, when you drive and where you drive to calculate your risk level. If you pose a lower risk of accident than the average driver, you can save money on your auto insurance premiums.
How Telematics Can Help Drivers
Telematics can help drivers by heightening their awareness to their own driving behaviors, and also gives drivers the ability to have some influence over their premium. Telematics programs typically give a view into how other drivers on your policy drive and can encourage family conversations about safe driving. There are some common elements of “pay how your drive” programs that provide potential benefits for drivers, from saving money on your car insurance premium to becoming more mindful in practicing safer driving behaviors.
While pricing is one reason for selecting an insurance policy, it can be also be beneficial to sign up for a program that recognizes and rewards your good driving habits with discounts.
