Telematics is a system placed in your car to track all your driving information. Auto insurance companies install insurance telematics devices in their clients’ vehicles to track when, how, and where they drive to. The driving data determine the insurance premium you get. Freight and logistics companies also use this technology to manage their transportation and delivery of goods.
Telematics uses GPS to track vehicle movement. The black box installed in your car gathers information on your location, mileage, acceleration, cornering, and braking. It also records data on speech and distracted driving while using your phone on the wheels.
The technology analyzes the data to determine whether or not you are a good driver. If your ratings are favorable, you get lower insurance policy rates. The policy rates rise for drivers with negative ratings.
Many insurance companies also offer discount packages based on telematics data to reward safe drivers. You can find out if your insurer offers these discounts.
In this article, we are going to take you through everything you need to know about vehicle telematics. So, let’s dive in.
Is Your Car Your New Spy?
Everyone has a personal relationship with their cars. You may refer to yours as a close friend. But with vehicle telematics, your ride could be your new foe. It could be tracking you and feeding out crucial information.
The next time you have a case in the courtroom, your car could be the witness. Funny, right? Telematics collects data on where you went, when you arrived, and how long you stayed there. The voice recognition also confirms whether you were behind the wheel.
The government can retrieve the information impeded in the system by court order, and in a divorce case, your car will table evidence of your whereabouts. And in other cases such as custody and accident reconstructions, your car data can either build or destroy you.
The Lower Premium Lure
Usage-based insurance is a growing feature of commercial, personal, and auto policies. The underwriting process has long been subject to traditional metrics, i.e., age, occupation, gender, education, and marital status. But telematics has stepped in in recent years to change the game. For instance, two drivers with similar income, age, and marital status could get different premium rates based on their driving skills and habits. A driver with good driving habits will pay less for insurance, while a reckless one will get additional charges for misbehaving on the road.
Over the years, there has been a significant rise in telematics use among insurance firms. Some insurers offer Drive Safe discounts that require you to install a telematics system in your ride. By signing up, you earn a certain discount percentage off your premium rates. The discount increases with every safe drive you undertake.
You can now earn lower premium rates by maintaining traffic discipline. But it might be worth it to give up some of your privacy to save hundreds of dollars on your auto insurance.
Advantages of Vehicle Telematics
Safe drivers are the primary beneficiaries of telematics. A less aggressive driver enjoys lower premium rates than a reckless road user, so if you’re a good driver, this is great news.
Another advantage is that if you’re using vehicle telematics, you have access to information about your mileage and driving habits. This information guides you on when to service your ride and when to make safety adjustments while on the road. It also keeps you from getting lost and offers an easy way to get road assistance when you’re off the grid.
Telematics has also helped to bring down the number of road accidents. Drivers who know that their road behavior is being observed are less likely to misbehave. They drive more keenly and follow traffic rules to earn low premium rates.
The technology has also made it a lot easier to track down stolen vehicles. You don’t have to rely on the police to trace your car anymore. You can do it yourself within minutes using a smartphone. This has facilitated quick theft recovery.
Disadvantages of Vehicle Telematics
Driving on the road sometimes requires accelerations and hard braking. The telematics system will not recognize whether you are acting recklessly or just being defensive. You may slam the brakes to avoid hitting something on the road and score a negative remark as a result.
Telematics comes with potential privacy issues. There are concerns about the use of personal information beyond insurance rates calculation. There is no guarantee that everything you do in your car is confidential. And the fact that the police can retrieve telematics data after a court order can be quite disturbing. While it can save you from trouble, you may regret having installed vehicle telematics in your ride if you end up on the wrong side of the law.
What to Note Before Enrolling in Any Telematics Package
Safe drivers receive the best discounts, while reckless drivers might have to pay more for insurance. Low mileage drivers are also likely to save more because they are less likely to cause accidents. You, therefore, need to consider your driving habits before signing up for any of those telematics deals. It might not be of help if you are a reckless or unskilled road user.
Understanding the rules and regulations of any program is essential. Every firm has its definition of a safe driver. It would be best to understand how an insurance firm gauges driving behaviors and how they affect premium rates.
The Bottom Line
Safe driving is rewarding. Auto insurance firms now use telematics technology to read into your driving behavior and calculate your premium rates. Reckless drivers pay a high premium, while drivers with superior driving habits pay less for insurance.
However, privacy concerns have emerged. Could your insurance company be feeding out your information to third parties in the name of monitoring your driving habits? It’s up to you to perform a background check and verify their integrity.