Understanding auto insurance is essential for the consumer; the more you know about your auto insurance options, the more informed decision you’re able to make about your coverage. This blog post aims to explain telematics to empower you – the consumer – to seek out the right agency and the right plan for you and your family.
Telematics refers to the telecommunication of informatics in real-time. Naturally, it’s real-time data collection communicated with your insurance company. Telematics allows your insurance company to sort drivers by real risk rather than estimated risk, keeping rates low for the most responsible drivers even if they fall in a high-risk category based on age, gender, or other factors.
What to Expect
First, ask your insurance agency to walk you through telematics programs available to you. If you choose to participate in a telematics program, you’ll receive a device that plugs into your vehicle’s diagnostics port, and you’ll be responsible for plugging it in.
That device once plugged in, will begin to observe and record information about the way you drive: where, when, and how often you drive; how frequently you brake hard; how often you exceed a certain speed; how sharp you turn; and other characteristics. It will also collect valuable information during an accident: identifying information about any other vehicle involved, the likelihood that injury was sustained, and more.
That information is shared with your insurance company in real-time and used for several purposes, which we’ll discuss next.
Companies Who Offer Telematics
Travelers, Nationwide, Safeco, and Progressive, among many others, offer a telematics program.
How the Data is Used
Telematics is mutually beneficial; both the insured and the agency experience positive outcomes as a result of the technology. The data collected is used to do a few primary things:
- To price auto insurance. High-risk drivers should pay higher insurance rates, and low-risk drivers should see savings, but until now, insurance companies have had to guess risk based on demographic information. Now, with telematics, it’s easier than ever before to differentiate between high and low-risk drivers and price their coverage accordingly, making it more fair for the most responsible drivers and keeping your rates custom and low.
- To reduce risk. High claims can drive up insurance premiums for everyone, so identifying drivers who are most likely to incur high claims early, before an accident ever occurs, can help insurance companies make decisions about who not to insure and issue cancellations on those policies.
- To understand accident dynamics. Disputes following an accident are common and leave drivers at risk. By recording details leading up to and during the accident, telematics can help drivers who were not at fault prove fault in the accident. They can also assist drivers and their insurers in identifying vehicles that left the scene of an accident and possibly even identify any witnesses who can help provide an accurate account.
Why Consumers Choose Telematics
Telematics provides two huge benefits to the consumer: lower rates for responsible drivers and better documentation of accidents.
To learn more about telematics, contact Myers Insurance Group today!