Telematics is growing in popularity among insurance providers. Unfortunately, the average driver doesn’t understand what the term “telematics” really means or the impact it can have on your insurance costs. In fact, Nationwide recently reported that only 27 percent of consumers understand what telematics is, leaving many of them unaware of how important this term can be for their personal auto insurance protection and costs. Here’s what you need to know about telematics.
The simple answer is this. When your auto insurance provider uses telematics to determine future rates, they use an in-car tracking tool that reveals all your driving habits. What this means is that factors unique to you determine your auto insurance rates. These factors may include any and all of the following.
Insurance providers use sophisticated technology when using telematics to determine your future insurance rates. However, it is a more accurate assessment of your risk than arbitrary information that has been used in the past, such as credit scores, to determine risk.
Many drivers have determined that they appreciate telematics for determining their insurance rates. How do telematics work? First and foremost, they can determine your insurance rates based on the safety of your driving. This means that if you choose to allow telematics to determine your insurance rates, your insurance premiums are based on your behavior behind the wheel. That’s a huge plus for many drivers, especially if it works to reduce your insurance rates. There are other important benefits to consider as well, including those listed below.
While telematics can save many drivers a fair amount of money on their insurance premiums, the truth is it doesn’t do this for everyone. For instance, people who have long daily commutes to work or those who do the bulk of their driving at night may experience higher insurance premiums with telematics. Plus, some people object to being tracked electronically based on privacy concerns.
Telematics lowers insurance rates by providing insurance companies with an accurate representation of your daily driving habits and behaviors. The more data the insurance providers have available to assess their risks, the more likely they are to reward drivers who exhibit fewer risks to them with more attractive insurance rates.
The flip side of this coin, though, is that they can assess higher rates to drivers who present greater risks of accidents, injuries, and costs based on the patterns discovered through the use of telematics.
Arnold Insurance understands the challenges of choosing the best insurance protection to meet your needs. Are you considering telematics? Do you simply want to know more about it? We can help.
We are here to help you determine what is the best option to meet your insurance needs, keep your rates low, and make sure you have the protection you need for your risks. Contact us today to learn more about the potential pros and cons of telematics for your insurance protection from one of our talented team of experienced insurance professionals.