Maybe you’ve heard about telematics from family or friends, but if you haven’t, that’s what we are going to be talking about today. Although it’s been around for about 8 years, telematics in the insurance industry is a relatively new technology.
What Is Telematics Insurance?
Car insurance telematics is a system that tracks your driving habits to determine the cost of your insurance. It is “the joint science of telecommunications and informatics,” according to Insurance Canada.
How Does Telematics Insurance Work?
Telematics is a usage-based program that collects data to rate your driving safety and track your mileage. When you sign up with a telematics program, an application monitors your driving habits which allows your insurance provider to customize your insurance plans according to your driving behaviour.
What Exactly Does The Ap Track?
Everything! While there are several insurance providers that offer telematics programs, and each one is slightly different, they are all tracking the same things; how you drive, where you drive, and when you drive. Here are some things they will be monitoring:
Braking habits
Acceleration rate
Driving speed/if you are following the speed limit
If you are driving between the hours of 12:00 AM & 4:00 AM
Distracted driving
They might even be tracking whether you are driving in snowstorms, which could lead to a penalty.
What Are The Benefits Of Telematics Insurance?
Traditional insurance rates are based off demographics like, age, gender, and insurance history. This means that men under the age of 25 have some of the highest insurance rates, while men and women over the age of 40 have some of the lowest rates. But what about those elderly women that are ripping around corners and cutting people off? Or the 20-something male that drives like a grandma? Telematics insurance aims to address this inequality by offering insurance plans based off of each person’s individual driving habits.
This means that if you are a safe driver, you’ll likely see some decent discounts in your premiums.
But on the flip side, if you’re driving like a maniac, you’re definitely going to pay for it. (As you should).
What Is The Downside Of Telematics Insurance?
As mentioned above, if you’re not practicing safe driving habits, you will be penalized. Although we’re not really sure if that’s downside, we’ll just call that the “consequences of your actions.”
However, there are a couple legitimate downsides that could become evident as telematics insurance grows and becomes more prevalent.
One of the main concerns about this technology is the use of your personal information. As telematics insurance providers collect detailed data about your driving habits and history, they could potentially sell this data down the road to other insurance companies. For example, if you decide to switch insurance providers after years of using insurance telematics, your data could be viewable by any company that you are looking to get a quote from. Which means that some bad driving periods of your life could potentially effect your insurance premiums years down the road.
Another downside is that mobile aps can’t tell if you’re a driver or a passenger, so if you are a passenger in somebody else’s car, you could be penalized for their bad driving habits.
So, Is Telematics Insurance Worth It?
As insurance brokers, our job is to advise each of our clients to the best of our ability. When it comes to telematics insurance, we aren’t really for it, or against it. We can see the pros and cons, but we believe that it is truly up to the client to decide what is best for them. All we can do is provide you with unbiased information so that you can make an informed decision.
If you’re still unsure whether telematics insurance is worth it for you, feel free to call one of our insurance brokers. We’d be happy to discuss it with you more!