Telematics technology focuses on improving safety, which can lead to substantial discounts for good drivers. Consequently, it’s important not to dismiss it without exploring the details.
What is a Telematics Device?
Basically, it is a small box that collects driving data. One of the biggest misconceptions is that a telematics device can capture data which the insurance company can use against you to increase your premiums. However, insurers take a more positive approach – they reward good driving, instead of penalizing poor performance.
What Data Does It Collect?
Typically, your insurer supplies the telematics devices and it collects information such as miles driven, speed, and hard braking. It may also record the times during the day you drive, since they consider driving at night riskier.
If you drive safely, you’re likely to qualify for a discount. Discounts are often combined with other benefits such as vehicle theft recovery and roadside assistance, too.
Your insurance company needs your permission to collect data. Ask them about what data they collect and how they store it before you enroll in the program.
How It Works
All vehicles made from 1996 onwards have an onboard diagnostic (OBD-II) port. It is a small connector, usually under your dash or near the steering column. It is the same port that your mechanic uses to analyze your car when a warning light comes on in your vehicle. It taps into your onboard computer to access data. Just plug in the device and it starts recording driving data.
How Can You Benefit?
We already mentioned that safe driving can lead to discounts, but some companies also offer discounted “mileage policies” for people who rarely drive or drive outside of rush hour when the risk for accidents is higher.
You may also benefit from a telematics device if you had an accident or infraction and are now on practicing safer driving habits. Your insurance company may consider your improvement and lower your premium quicker.
Most insurers allow you to view your data online to see how you can improve. This can be especially beneficial for new drivers, or drivers who’ve developed bad habits after years behind the wheel.
Parents can monitor their children’s performance remotely, instead of backseat driving, and seasoned drivers can adjust their behaviors for lower premiums and better fuel economy.
Business can also benefit from telematics in many ways. They can monitor and optimize usage and reduce their operating expenses. If a company operates a fleet of vehicles, the savings can be substantial.
It’s A Sign of Things to Come
SMA Research predicts that 70 percent of all auto insurance carriers will use telematics by 2020. Understandably, insurers encourage telematics since they want to focus more on performance, and less on age and gender, to determine premiums. It is a better reflection of risk.
The technology makes insurance more affordable for low risk drivers and encourages everyone to drive more safely. This reduces accidents, congestion, and pollution. Telematics also permits insurance companies to accurately estimate damages, recover more vehicles, and reduce fraud, which reduce insurance costs and premiums.
Talk to us about a telematics device. It may help you reduce your Rhode Island auto insurance costs and improve your driving habits, which benefits all drivers. We’re your local independent insurance agent and we work for you, not the insurance companies.