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.