With technology improving and changing the way common services are handled and organized; it helps to really understand what you’re dealing with and how it affects everyday life. So, before we answer the question “How telematics is affecting car insurance,” we’re going to go through the basics.
What is telematics?
Telematics refers to the use of telecommunication devices that send, receive and store computer-based information with long-distance transmission. When these types of systems are used in motor vehicles, it is referred to as vehicle telematics. Vehicle telematics includes things such as GPS (Global Positioning System) tracking, emergency warning systems, driving-assistance technology, wireless safety communications, etc.
How is this beneficial to car insurance companies?
Vehicle telematics has been used for both personal and commercial use as these are powerful tools for individuals and business to know exactly what happens out on the roads.
More and more motor insurers are making use of the technology and information provided by vehicle telematics and in some cases, even including it as a necessity for insurance. These are some benefits of vehicle telematics that affect car insurance:
Crash reporting: Data provided by crash data reporting is very helpful in providing the insurer and car owner with information about an accident and what caused it.
GPS Anti-Theft system: One of the best ways to locate a stolen car and also prevent your car from getting lost or stolen is to install GPS tracking. This kind of anti-theft system is great for clearing up any fraud as well, and many car insurers require this kind of security for certain car models.
Wireless Vehicle Safety: The purpose of this type of vehicle telematics communications is to provide useful information about road hazards, road works ahead, and the speed and location of vehicles.
Company Fleet Management: For companies with a large fleet of vehicles, vehicle telematics is a great way of tracking vehicles, managing routes and location of vehicles and fuel management.
All of these factors plus more can affect the way car insurance works and how premium rates are calculated. Here are more ways that vehicle telematics affects car insurance and answers previously unanswered questions for insurers:
- The distance and times the driver is driving everyday
- If they stick to the speed limit or not
- Whether or not the driver slows down for a yellow light or zooms through it
- If the driver goes through dangerous roads and risky areas
Knowing these details can affect the way insurers can calculate a personalized premium at the best possible price while also encouraging road safety and responsible driving.
Conclusion
How Telematics is Affecting Car Insurance? It makes it far easier for insurers to cover vehicles and offer premiums with better prices based on information from telematics. In other words, by promoting road safety and responsible driving, insurers can offer drivers a great premium price just for being a good and responsible driver. It is helpful for both insurers and vehicle owners to provide and receive reliable information about the type of driver they are, how they behave on the roads, the routes they take and by reducing the risk of vehicle theft with GPS tracking.
