With so many different types of insurance policies available today, it can be tricky to determine which is right for you.
The easiest way to achieve this is to fully understand the ins and outs of each policy, so you can find the one that’s best suited to you, your car, and your unique driving behaviors.
In light of this, we thought we’d explore one particular type of insurance that might just be the perfect option for you – telematics insurance.
If you’re interested in securing your quote for car insurance that prices your policy based on how much and how well you drive, explore more on how telematics works at Lemonade Car.
What is telematics insurance?
Telematics insurance uses advanced technology to analyze various aspects of your driving.
The purpose of telematics is to give insurers a clear picture of your unique driving, so they can accurately assess how safe you are as a driver – and, therefore, how likely you are to be involved in an accident or make a claim.
The idea is that the data shown by telematics can be used to adjust your insurance premiums to reflect your safety as a driver.
How does telematics insurance work?
Telematics insurance works through a specific technology that uses telecommunications (cables, cellular networks, phone lines) and informatics (computer systems that organize data) to collect and transmit data from your car.
This technology is installed in your car, often through a computer chip that’s installed in the windshield. However, some insurers will use an app that can be installed on your phone. Both of these will then use your location services and motion sensors to gather the data needed.
The specific data gathered can include the following:
- Your ability to follow speed limits
- How well do you stop at stop signs
- If you execute maneuvers safely
- What times do you drive most frequently
This data is then transmitted to your insurer, who uses this to adjust your insurance premiums accordingly.
What are the perks of using telematics insurance?
There are many different perks to taking out a telematics insurance policy, which includes, but are not limited to:
Premiums based on unique driver behavior
The main benefit of telematics insurance is that you get premiums based on your unique driving behavior.
For many demographics – young or new drivers, for instance – insurance is generally more expensive since these groups are statistically more likely to be involved in an accident.
However, this generalization doesn’t take into account the many drivers that make up these groups who are safe, cautious and law-abiding drivers.
This is why telematics is beneficial, as it allows your insurer to match your premiums with your personal driving and no one else’s.
Therefore, if you drive safer, regardless of your demographic, you could be rewarded with lowered premiums!
GPS tracking of your vehicle
Telematics uses location-based software, which can be very useful in scenarios where you require emergency services or roadside assistance.
The technology uses a global positioning system (GPS) to continuously track your vehicle’s location. Therefore, in the event of a car collision or breakdown, for instance, you’ll have a clear and accurate pinpoint of your location.
This means assistance can be sent out to you much quicker, and they’ll arrive at your exact location to give you the help you need.
All you have to do is keep your location services switched on.
Adjusted premiums for your mileage
Another statistical fact upheld throughout the insurance industry is the more you’re out on the road, the more likely you are to be involved in an accident.
Therefore, many insurers will give higher premiums to drivers with more mileage and often ask you to predict your expected mileage for the year. This results in many drivers paying for more mileage than they actually travel, with an overestimation.
There’s a big difference in the likelihood of an accident between 15,000 miles and 40,000 miles in a year.
With telematics, GPS tracking will help your insurer see your exact mileage so you get accurate premiums that align with how frequently you actually drive.
Now you know the ins and outs of telematics insurance, have you finally found the perfect policy for you and your car?
