Telematics-enabled UBI policies offer benefits to both insurance policyholders and insurance companies. If you have never heard about telematics car insurance options and don’t know how using telematics could result in lower car insurance costs for your family, read on.
Insurance Premiums: Risk and Cost
The costs of insurance policies are based on assessed risk. As an insurance customer, you want to know that if something were to happen to a family member or your property, the costs associated would be covered. Almost anything can be insured, but no one pays premiums to protect themselves from things they think will never happen. You assess the risk you believe exists and buy insurance to cover things you would find hard to repair or replace.
Insurance companies assess their own risk too: how likely is it that any specific customer will have a negative and expensive event happen? These likelihoods are determined by actuarial science which gathers copious amounts of data and uses it to make highly accurate predictions about risks based on characteristics of various demographics.
This is why a new driver will have much higher car insurance premiums - because he is statistically much more likely to get into a car accident than a 50-year-old driver who has years of experience driving. What if you could lower your insurance costs by demonstrating your own driving skills, showing the insurance company you are a good and careful driver? With telematics you can.
What Is Telematics?
Many insurance companies offer their customers the option of using telematics to qualify for usage based insurance (UBI), otherwise known as pay-how-you-drive insurance. The policyholder allows the insurance company to gather specific data on his driving behavior by installing telematics in his car’s OBD-II port or on a mobile app. As the person drives, data about his driving, including how fast he drives, how often he brakes, and what time of the day he uses his car most frequently, is transmitted to the insurance company. They use this data to rate the driver’s performance and determine a more personalized premium based on the risks he poses.
For better drivers, using telematics can mean they are offered discounts and lower car insurance premiums. The reverse is true for bad or aggressive drivers. UBI policies can offer incentives to all drivers to drive more carefully or less often, creating a win-win situation for both parties.
Telematics Technology
Insurance companies use different types of telematics devices to collect data, including bluetooth beacons, diagnostic port plug-in devices, and mobile apps. These devices can track different things. A smartphone app can track the driver’s phone use while driving, but a plug-in device cannot. This data is collected over a period of time, so drivers have to drive consistently better to receive that savings.
Is it worth it for customers to use telematics? It certainly depends on the customer. Safer drivers have every reason to ask to showcase their driving habits. The better they drive, the more money they can save - up to 30% off their premiums or more. Often policyholders will also get an enrollment discount in addition.
The drivers who get the best discounts are not just the safest drivers. This group also includes people who drive less frequently like stay-at-home mothers, retirees, and people who work from home.
Most insurance companies do offer telematics car insurance coverage options in addition to their regular auto insurance policy options. If you are curious about telematics or how you can save money on your auto insurance, please contact us at Navisure Insurance Group. We will be happy to go over your coverage and make recommendations based on your needs.
COREY VANDERMEER | PRESIDENT
Corey started his insurance career in the claims department for a national carrier and learned the basics of insurance coverage and how it’s applied. From there he decided to take the jump into sales and joined an independent insurance agency. Here he learned how to build coverage around the needs of each individual and cater to every client. When Corey decided to start an insurance agency he did so with the intention of simplifying the process of getting insured. With a focus on technology and simplicity; his goal was to create an insurance agency that was different from those currently dominating the market place.
When he’s not working, Corey enjoys golfing, fly fishing and spending time with his wife and kids. Together they enjoy traveling to Northern Michigan and to his wife’s hometown of San Francisco.