Insurance companies are always looking for ways to understand their customers and, most importantly, to minimize their risk. Up until recently, companies used various forms of data to figure out how risky a particular driver might be. These data include driving history, location, and even sometimes credit history.
More recently, insurance companies have turned to data collection to make better decisions about their drivers. Connected car insurance, or telematics-based insurance, is gaining in popularity. And this is not only about the insurance company gauging risk, there are good reasons you may also be interested in a connected car insurance policy. Let’s learn more.
What is Connected Car Insurance?
Connected car insurance uses technology to capture data about your driving habits. The intention is to reward drivers who are safer and to be able to charge more for drivers who are not. Using telematics, safe drivers can essentially prove to their insurance company that they are low risk and may be able to take advantage of additional discounts or monthly premium cuts, all based on their driving data.
How Does Connected Car Insurance Work?
Connected, or telematic, car insurance uses a device to collect data as you drive. The device can be a plug-in piece of equipment or an app downloaded to a smart phone. In some cases, such as with GM’s OnStar, the device is OEM equipment and already connected from the manufacturer.
The device collects data as you drive and sends it to the insurance company. The company can then use data analysis to set your rates.
What Kind of Data is Collected?
With so much concern over data privacy these days, many may be reluctant to let their insurance company track them. But there are distinct money-saving advantages to connected car insurance, if you are a safe driver.
Here are some examples of the type of data typically collected by telematics:
- Speed – Your highest speed, your average speed and other data can help determine if you are following the rules for what is safe and legal.
- Acceleration and Braking – Hard accelerating and braking, beyond what is normally required to start and stop your car, can be a sign of risky driving.
- Distance – The more you drive, the more risk for the insurance companies. This is where low-mileage drivers can see an advantage by using telematics.
- Time of Day – If you drive mostly at night, you will likely be considered higher risk.
Is it Worth it to Have Telematics-Based Car Insurance?
Depending on what type of driver you are, there can be distinct advantages to having telematics-based auto insurance. With data, insurance companies can provide a more accurate quote than basing your premium on your age, gender or the type of car you drive. Actual data can prove you are a safer driver than your insurance company may think.
If you are a safe driver, you may benefit from telematics. And the best way to find a policy that saves you money is to shop around.
When you’re ready to explore a connected car insurance policy, InsuranceWins can help. Just fill out our short form and you will receive quotes from major auto insurance companies, some who offer telematics. Get started and let technology help save you money!