You come to a full stop at every stop sign, you never speed through yellow lights, and you always obey the speed limit. If this sounds like you, you may have wondered why you have to pay the same amount for car insurance as your fellow motorists who can’t seem to follow the rules of the road. The problem is that most people call themselves safe drivers, but how can they prove it? That’s where telematics, or usage-based insurance (UBI), comes in handy. If you have questions about what telematics are, how they work, and how they save you money, keep reading.
What is telematics?
Telematics refers to a group of technologies that monitor driving, send data from your car to a central server, and use the information for a variety of reasons. Telematics has been around for decades and is utilized for a variety of reasons beyond insurance. For example, fleets utilize telematics to verify that their drivers are traveling the best routes, and anti-theft systems in vehicles use it to track and retrieve stolen vehicles.
Telematics insurance, on the other hand, is more specific: it refers to the use of a device that tracks driving and location in order to provide good drivers with lower premiums. The app usually combines a GPS signal with data from your car about turning, acceleration, and braking, and how many miles you typically travel. This information is then sent to your insurance provider.
How does an app measure my driving?
Telematics collects data on how drivers travel using cellular, GPS, and other technologies. It tracks the time of day and vehicle speed, as well as how many miles you drive and how often you brake hard or accelerate quickly. Some even keep track of how much time you spend idling. Others may include cornering (the way you take a corner) and cell phone use while driving. Basically, you download an app that tracks your driving in the same way many apps can monitor how many steps you take per day, the speed you are going in your car, or your heart rate while working out.
Can telematics be turned off?
On-board devices (OBD), plug and drive, and mobile phone apps are three types of car telematics devices that can be uninstalled or “turned off.” Unfortunately, most vehicle telematics systems, such as built-in telematics in new cars and “black box” telematics from insurance companies, make doing so on your own virtually impossible. However, if you contact the telematics firm, you may be able to remove your consent for that data to be transmitted to third parties. The benefit of an app over other systems is that you’re in complete control and can uninstall it at any time.
Will my insurance rate go down if I use telematics through my insurance provider?
With a UBI program, you may be able to earn a lower premium if you’re a cautious driver. If you’ve filed one or no prior claims with your insurance, you’re also likely to have a lower premium. But UBI plans use telematics to track your driving in real time and may not rely as heavily on historical data like your driving record.
When looking for a UBI policy, consider all of the variables that each firm tracks and compare them to your driving patterns. If you drive to a late-shift job every night, for example, a UBI plan that measures the time of day you’re driving may not save you much (or any money at all) — some insurance companies consider daylight driving to be safer.
How often is my driving score taken into account?
UBI systems that analyze driving behavior normally collect data for a set amount of time — usually until your next policy renewal — in order to identify your behaviors and, if you qualify, reduce your rate. When you sign up for the program, certain companies may give you a discount right away.
Is my data safe? What data is collected?
You should consider if you’re willing to transmit information about how you drive to your insurer in exchange for potentially lower auto insurance prices. It’s up to you whether having your driving habits, mileage, and phone usage monitored is worth the possible savings. Before you sign up for a UBI program, be sure you understand exactly what the plan tracks and with whom the corporation distributes the information, if anyone. Each insurance company is different when it comes to who will be privy to your information.
What if several people drive the car?
Because most telematics insurance covers the car and doesn’t know who is driving, everyone who drives the automobile has an impact on premium cost. With an app-based telematics program, the score will be per driver rather than per vehicle. It doesn’t matter what car they drive as long as they have their phone with the app installed with them.
What if I don’t drive very much?
When you use a UBI program that merely tracks mileage, you’ll usually be charged a monthly base rate plus a per-mile fee. Keep in mind that the specifics of an insurance company’s UBI program may differ by state or may not be offered in all states. If you find yourself mostly working from home, a program that tracks mileage may be a good option for you.
What if I’m riding as a passenger?
Most telematic apps can easily tell if you are a passenger. Check with your insurance company to ensure that their app has this capability.
What if I get a new phone?
Most mobile telematic apps require username and password verification. So, if you get a new phone, all you have to do is redownload the app and put your information in. You won’t lose any of your past data.
Is telematics worth it?
Opting in for telematics is a personal decision, though it may be the way of the future. Some newer vehicles include built-in telematics systems to learn more about driving behavior and ultimately, to benefit consumers and car companies through the knowledge gained.
Specific to insurance, though, deciding whether to join a telematics program to see if you can qualify for a lower and fairer price on your insurance requires you to take an honest look at your driving behavior and assess how telematics may or may not benefit you and your policy. Everyone’s situation is different. Of course, we always encourage safe driving and hope that all our policyholders drive safe behind the wheel.
What are the benefits of telematics?
Don’t drive a lot? Good driving habits? You might benefit from opting into telematics. Since you are giving your insurance company an inside look at how you drive far beyond what they get from a traditional quote process, there’s an opportunity for you to get rewarded with a fair and often lower price by opting in.
With mileage-based telematics programs, you are essentially choosing to pay for insurance by the mile. If you drive infrequently and a long trip is few and far between for you, you might be a good candidate for mileage-based telematics. Allowing your insurance to track your mileage could ultimately lead to a discounted policy.
For behavior-based telematics, think about the factors that telematics technology takes into consideration that we mentioned above — everything from hard braking to speed to the time of day you usually drive. If you know your driving habits are generally more cautious and would perform well when being monitored by telematics, you are probably a good candidate to try it out and see if it can positively impact your rate. If you have an inkling that your driving would not be seen positively through a monitoring tool, telematics could mean a higher rate on your policy.
Does Elephant have a telematics program?
Elephant will soon launch its own telematics app to reward its policy holders for safe driving. The app will use behavior-based telematics to learn more about driving behavior and give drivers a way to save money on policies based on those behaviors.
Once launched, customers will be able to download the app and drive as normal for a specified time period to see if they qualify for additional savings on their Elephant auto policy. When drivers sign up for an auto insurance policy with Elephant, they will be able to opt in or out. Those who opt in will get instructions on how to use the app, with a discount for simply using the app and possible additional savings for excellent driving behavior.