Telematics technology is a leading edge form of technology that customizes your insurance according to your driving style and behaviour. Telematics is commonly used by drivers who do not exceed the 10,000 km mark per year.
There are many risk factors that are associated with car insurance. As a result, some insurance companies have turned to auto telematics in order to evaluate or assess such risk factors. Here, we will discuss auto telematics and how it can help lower your car insurance.
What is telematics in auto insurance?
Telematics-based car insurance is a specialized type of policy. Essentially, insurance companies will utilize in-car tracking technology in order to gauge different driving trends and behaviours with pinpoint precision.
The devices that are used can track a myriad of different metrics including, but not limited to, driving duration, mileage and auto acceleration. The car insurance premiums of the client will be calculated based on the data that is collected and analyzed by the system.
It should be noted that such programs and systems are not mandatory. It should also be mentioned that all of the variables that are collected in order to calculate the amount will be shared with you should you decide to participate in the program.
Why do insurance companies use telematics?
Telematics technology allows insurance providers to learn more about their clients. In the past, the only real way to determine if a client was a poor driver was if they received a deluge of speeding tickets or if they had multiple accidents.
Generally speaking, clients would quietly make payments and, as long as payments were made on time, providers generally went on with their business.
Today, however, telematics allows insurance companies to learn more about the driving behaviours of their customers in order to better gauge how much they should charge.
Telematics is also a cost-efficient form of technology. Providers can tap into the power of their clients’ smartphones in order to track their driving behaviours.
Distance travelled, acceleration and other metrics can reliably be tracked using the sensors that are already integrated into virtually every smartphone. Customer engagement is also enhanced, thanks to the benefits of auto telematics.
The feedback that companies can provide their customers is both immediate and personalized. In-app embedded services can be used in order to provide clients with game-like experiences that can be quite enjoyable.
Providers can also provide their clients with incentives for prudent driving as well. For example, a provider can offer gas vouchers or gift cards in order to motivate their clients to drive safely.
Policyholders can even enter contests where the drivers with the highest concentration and safety scores get additional prizes. Telematics also allows companies to stay ahead of their myriad competitors.
Telematics essentially rewards customers who drive safely using a piece of technology that they already use every day. By leveraging smartphones, insurance providers will be able to reward their safest clients with lower insurance premiums.
As for poor drivers, they can be reprimanded by having their premiums increased to offset some of the added risks and dangers that they pose to other drivers on the road. Better risk assessment is yet another benefit.
The goal is to entice lower-risk clients, as doing so will help pave the way for lower risk on the provider’s end as well. Timely feedback will be provided to clients, helping alert them of any risks and dangers.
The end result is most drivers will make the necessary changes to their driving style, which will subsequently reduce the risk that they will file a claim in the future.
It is also worth noting that the majority of people who would sign up for a telematics program are of the safer variety. As a result, the added caution that they bring to the table will translate into more profitable customers in the long run.
In fact, a study conducted by a consulting firm that assesses claim costs found that mobile telematics led to a 57% drop in total claim costs.
As for high-risk clients, they will likely avoid participating in such a program or may leave the provider altogether, leading to improved profits in the future.
In sum, the mobile connectivity that auto telematics provides is simple, efficient and cost-effective, which allows for more economical solutions that benefit all parties involved. Auto insurance plans can be personalized based on the unique driving behaviours of each client.
How Telematics Helps Lower Your Auto Insurance
The driving feedback that is provided is personalized. You will learn about your driving habits as well as your mileage in real-time. Your speed, distance travelled and even your braking speed/reaction time will be analyzed by the state-of-the-art system.
The time of day when you operate your vehicle will also be tracked by the system. Telematics provides vehicle monitoring technology that is truly cutting edge. Telematics is an integral part of usage-based insurance, which is also known as pay-per-mile insurance.
You may be charged a per-mile rate and a daily base rate if you wish. If you are a low-mileage driver then you will only be charged for the miles that you actually drive if you opt for a usage-based plan that includes telematics tracking.
You can enjoy a safer and improved driver experience by incorporating telematics into your daily commute. Telematics may help improve your driving style, behaviours, and even skill level.
As a result, road safety will be improved, leading to fewer accidents and speeding tickets in the process.
Taking the First Step
Telematics allows insurance companies to track the driving behaviours of their customers. Drivers are galvanized into taking the necessary actions needed to improve their driving in the event that they wish to file claims.
Auto insurance premiums are also lowered which incentivizes drivers to continue driving in a cautious and safe manner.
In sum, auto insurance and auto telematics often go hand in hand, allowing both clients and providers to enjoy financial benefits while also helping protect drivers and passengers in the process.