Many drivers are now letting their car insurance track their every move. Why are they doing it, and how does it work? Keep reading to find out.
What’s the Benefit to Letting Your Car Insurance Company Track Your Driving?
In a time when almost everyone is concerned about the privacy of their data, it seems like a major intrusion to let your car insurance company track your every move on the road. Many drivers are still doing it because of the benefits it comes with.
Traditionally, insurance premiums are based on broad risk categories that are basically guesses. Out of the millions of other people with your age, gender, zip code, job, and other factors, the insurance company assigns a probability that you will get into an accident or have another type of claim. Statistically, that works out for the insurance company over the large number of drivers they insure. However, if you’re a safer driver than average, it’s unfair to you because it means you wind up paying more. In addition, all the drivers share the extra cost created by those less safe drivers.
Letting the insurance company track your driving gives you a much fairer rate because it reflects how you actually drive. For many people, this means a lower rate. In addition, many insurance companies offer a discount just for signing up.
How Does it Work?
These tracking devices are known as telematics. They record data while you’re driving and send it back to the insurance company the next time you’re connected to the internet. Most devices link via WiFi or Bluetooth to an app on your phone. The device stays plugged into your car’s onboard diagnostic port for a time ranging from a few weeks to permanently depending on which program you’re in. It tracks factors, including braking, acceleration, speed, and cornering. Some insurance companies also track when you drive, where you drive, and how many miles you drive.
Most insurance companies use the data to recalculate your six or 12-month insurance premiums. Others are adding usage-based programs that charge a variable price based on how often you drive and your mileage.
Is Telematics Used in Claims?
The main use of telematics is assessing risk, and the device often doesn’t track as much information as you might get from the black box of a commercial truck or airplane. However, the devices can give insight into how a crash happened. For example, the other driver might say you were speeding, but your maximum recorded speed was below the posted speed limit. If you are involved in a crash, your insurance company does have the right to use the data unless you had an explicit agreement that it would not be used.
Ask Your Insurance Agent
To learn more about telematics, whether you should enroll, or which car insurance companies you can use, talk to your independent insurance agent at AFI Insurance. If you’re in the area, contact us now to get started.