What the Heck is Insurance Telematics?

telematics insurance

It’s been pre­dict­ed that by 2017, 19 mil­lion dri­vers will rely on telem­at­ics for their insur­ance poli­cies. Telem­at­ics are becom­ing inte­grat­ed into vehi­cle nav­i­ga­tion through smart­phone appli­ca­tions and dash­board engrained sys­tems, some­times as stan­dard and some­times as option­al equip­ment. What about insur­ance telem­at­ics – what is it and how does it work? It’s some­times called “black box” insur­ance, and could help low­er the cost of own­ing a car. Scott Kel­ly, head of Gocompare.com, a car insur­ance com­par­i­son ser­vice, walks us through the basics…

1. It’s based on actu­al dri­ving behav­ior and involves hav­ing a GPS-enabled “black box” fit­ted under the dash­board to track the way the car is dri­ven. The box records and trans­mits dri­ving habit data back to the insur­er.
2. The insur­ance telem­at­ics box may mon­i­tor dif­fer­ent types of dri­ving behav­ior which can be used to either reward or penal­ize the dri­ver by reduc­ing or rais­ing your pre­mi­ums accord­ing­ly.
3. Col­lect­ed data includes mileage, speeds dri­ven, time of trav­el, and brak­ing and accel­er­at­ing habits.
4. How it’s han­dled varies by auto insur­ance com­pa­nies. The pre­mi­um may vary from one insur­er to the next; some may only adjust the pre­mi­um at renew­al and oth­ers may do it at reg­u­lar inter­vals through­out the pol­i­cy.
5. Stud­ies are show­ing more than half of dri­vers expect to switch to a telem­at­ics-based car insur­ance pol­i­cy by 2017, and 30% of par­ents would rec­om­mend their child con­sid­er one.
6. Young, inex­pe­ri­enced dri­vers, and those who have low annu­al mileage, are the most like­ly to ben­e­fit from a telem­at­ics pol­i­cy. And actu­al data can be col­lect­ed on dri­vers con­sid­ered to be high risk, which could low­er their pre­mi­ums and give them an incen­tive to dri­ve more safe­ly.
7. As car insur­ance costs con­tin­ue to rise, telem­at­ics is being seen as a way to com­bat expen­sive pre­mi­ums.

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