Perhaps you’ve never heard the term telematics before, but you’ve likely seen the auto insurance commercials that advertise them. Telematics refers to the combination of two sciences for benefit: telecommunications and information. The consumer may best know telematics for its use by auto insurance companies, and here’s everything you need to know.
Telematics: The Basics
Telematics devices, used only with your consent, provide your auto insurance company with information about your driving habits. These devices can help keep car insurance rates low for responsible drivers.
How Telematics Work
It’s pretty simple:
- Your insurance company will provide you with detailed information about their telematics program so you can make an informed decision.
- If you choose to participate, you’ll be provided with a device that plugs into the diagnostics port of your vehicle.
- You’ll simply plug the device in, and it will begin monitoring your driving habits: how often you brake hard, speeding episodes, sharp corners, and basic demographics like when, where, and how much you drive.
- The device transmits the information to your insurance company, who uses the data to calculate your car insurance rates (and for accident investigation, which we’ll discuss in detail later).
Companies With Telematics Programs
Telematics is used by a number of major insurers, including Travelers, Nationwide, Progressive, and Safeco. You can ask your insurance agent’s office what your options are if you’re interested in participating in a telematics program to lower your rates.
How Telematics is Used
The information collected by your insurance company is used for two primary reasons: to better understand your risk of “loss,” (likelihood to file a claim) and to investigate accidents more thoroughly and accurately. The information gathered might vary a little from one company to the next, but generally includes:
- how often you brake hard
- how sharp you turn corners
- how many miles you put on your car
- what time of day you drive the most
- where you drive the most often
- how often you exceed a certain speed (usually around 80 miles per hour)
Drivers who engage in high-risk driving behaviors will have higher insurance premiums, while drivers with fewer of these episodes will have the lowest insurance rates.
Information gathered before, during, and immediately after an accident that can help your insurer determine what happened include:
- impact information, including the likelihood that a passenger in your car, the driver of another car, or a passenger in another car may have been injured in the accident
- information about the vehicle involved in the accident, which is especially helpful in a hit and run cases
- the location of the impact and information about the damage sustained in the accident
- information about driving behaviors leading up to the incident, such as speeding, swerving, or hard braking
Why Explore Telematics?
All of this information serves several purposes. It helps keep rates low for responsible drivers; it helps prevent insurance fraud; it protects you from claims you were at fault if you weren’t, and it helps ensure you get the coverage you need when involved in an accident. Perhaps most importantly, it encourages safe driving, helping to prevent accidents before they occur.