Traditionally, car insurance premiums are calculated using a variety of risk factors, such as your age, driving history, the type of car you drive, and the estimated number of miles you drive each year. Telematics insurance takes this idea to the next level by directly tracking your driving behaviors to create a much more accurate risk profile. Tracking programs work by keeping an eye on your actual habits behind the wheel instead of making generalizations based on your personal information. That way, if you drive safely, you can earn a lower rate due to your decreased likelihood of getting into an accident.
If you’re curious about how you can save money on your car insurance by simply keeping up with your safe driving habits, get started by exploring the basics of telematics.
Defining Telematics and its Place in Car Insurance
Telematics is the process of remotely monitoring the way vehicles move. In the world of insurance, telematics allows carriers to observe their customers’ driving habits. They can track different aspects of your behavior on the road, including:
- The number of miles you drive per year
- Acceleration
- Braking
- Cornering
- Following the speed limit
- Using your phone while driving
Based on those factors, your insurer will assign you an overall score or risk level. If your data indicates that you’re a safe driver overall, your insurer can cut you a deal on your coverage.
The Evolution of Pay-as-You-Drive Models
Insurers have been using telematics since the late ’90s. It began with pay-as-you-drive or usage-based coverage models, where you would plug a telematics device into your car’s diagnostic port for a set period of time. The device would collect information about how much you drove, along with other details about your driving habits. Then, you’d return the device to your insurer, and they would calculate a custom rate based on how much you drove and your general risk level as a driver.
Today, many insurers have developed more convenient insurance tracking programs that track your behaviors by the minute. Instead of having to regularly recheck your driving habits, you can keep a device in your vehicle that will communicate with the insurer in real time. Some companies will even use your phone as the tracking device, so all you have to do is download a telematics app for car insurance and calibrate it to your vehicle.
Some examples of these types of apps include:
How Safe Driving Habits Translate to Lower Premiums
Insurers calculate your premium based on your potential cost as a client. For example, if you’ve caused several accidents and gotten multiple tickets, your carrier would probably assume you’re likely to get into an accident and make a claim in the future. As a result, you’d likely have a high premium. Similarly, insurers may look at a driver with a clean record and assume they won’t make a claim, then give them a lower premium.
However, this is just a guess based on the available information. There are plenty of unsafe drivers who have never made a claim and plenty of safe drivers who have been in an accident.
With telematics, insurers don’t have to guess. They can look at your driving habits in real time and determine if you’re driving safely or not. This helps them accurately adjust your risk level and give you a safe driver discount whenever possible.
What To Consider Before Switching to Telematics Insurance
If you drive safely, telematics is a no-brainer. However, some people may wonder if telematics might increase their rates. Typically, these programs are designed to reward safe drivers, not punish unsafe drivers. Additionally, one instance of unsafe driving is unlikely to increase your rates because telematics programs will consider your driving behavior over a certain stretch of time.
However, it is possible for you to get a rate increase if you don’t drive safely for an extended period of time. If you know you regularly speed, take sharp turns, and brake at the last minute, you may want to practice better habits on the road before you sign up.
Cultivating Better Driving Behaviors
Monitoring programs are an easy way to get cheaper car insurance, as long as you drive responsibly. Want to make sure you’re a great driver before signing up for your provider’s telematics program? Implementing a few best practices can go a long way.
Understanding Your Telematics Data
Once you sign up for a driver monitoring program, you’ll most likely be able to see a dashboard with your driving data. You’ll get a score for different categories of behaviors behind the wheel, from your speed to your cornering habits. Some apps may even give you feedback for each individual trip you take in your car. Check each category regularly to learn what aspects of your driving you can improve.
Tips for Improving Your Driving Score
Adopting safe driving habits is the best way to improve your score and decrease your risk level with your insurer. Brake gently and gradually, take corners slowly, follow the speed limit, and accelerate at an even pace. It’s also helpful to keep track of your score over time to ensure you’re making changes successfully.
Addressing Common Concerns and Myths
By now, you understand the many benefits of using a telematics program to save money on your insurance. However, there are a few potential drawbacks to consider. Here’s a breakdown of potential cons and common myths associated with driver monitoring programs.
Privacy Considerations in Telematics-Based Insurance
Many people simply don’t like the idea that their movements are being tracked, even if it’s for a legitimate reason, like lowering your premiums. It’s important to note that reputable insurers have an obligation to keep your data safe. Third parties, such as friends, family, or even other companies, won’t be able to access your location and driving information without your permission.
Government access to this data is a gray area. Because vehicle tracking systems are still on the rise, it’s not clear whether government agencies such as the police will be able to subpoena your driving data if you commit a crime. However, it’s more likely that the government would secure location information from your cellphone than your insurance provider. Ultimately, driver monitoring programs protect your privacy and only focus on collecting data that relate to your insurance risk.
Debunking Misconceptions About Usage-Based Insurance
Along with privacy concerns, there are a few other myths related to telematics. For example, many people worry about their telematics devices or apps being hacked. In reality, these devices are highly secure. They come equipped with security features to protect your information and help you feel safe.
Another misconception is that your rates will increase with every mistake. In reality, monitoring systems focus on an overall picture of your habits instead of one specific instance. For example, if you need to slam on your brakes because of a hazard in front of you, but you usually brake slowly and evenly, you’ll probably still get your discount.
Staying Ahead of the Curve With Innovative Insurance Products
By signing up for a usage-based insurance program, you can maximize your savings by driving safely. The more you implement safe driving habits, the more you can save.
At Freeway, you can find multiple competitive options for telematics insurance. You can get a serious discount on your policy just by signing up for a usage-based device. Get started by hopping online for a free quote, taking a trip to your local Freeway Insurance office, or calling 800-777-5620.
