Technology is transforming every aspect of our lives, and insurance is no exception. Insurance carriers are tapping into automotive telematics to guide insurance premiums.
What is telematics? This is a form of communications technology that can be used for monitoring a vehicle to determine driving behaviors. Using a combination of GPS, Bluetooth, and mobile devices, insurance companies can review customers’ driving habits and reward safe behaviors with reduced premiums.
For example, a telematic device can monitor the times of day drivers are on the road, their mileage, and sudden changes in speed (which indicate rapid accelerations or hard braking).
Insurance companies can use this data to predict driving habits and generate a reasonable premium based on these behaviors. Drivers are typically required to have the device in their vehicle for a set period of time before a premium is established. The premium may also fluctuate as driving changes. As vehicle operators drive more safely, the premium lowers.
Of course, if drivers have poor driving habits, this can cost the policyholder. If the telematics data shows risky behaviors, the premium could go up! However, the knowledge that they are being monitored and the incentive of monetary savings may actually help drivers develop better habits on the road.
Do your operations rely on any commercial vehicles? These safe-driving programs are a growing trend and could provide significant savings on your premiums. To find out more about telematics and how it can help you save money, contact our office.