a driver in their car that's covered with a telematics based auto insurance policy

The Rise of Telematics in Car Insurance: What It Means for Your Premiums

Recently, something interesting has become popular in the world of car insurance: telematics. While some companies, like Progressive, have been using electronic tools for quite some time, others are just now realizing how quickly people will approve the use of the devices in order to save money on their car insurance premiums.

What are telematics, you ask? And how can they raise or lower your insurance costs? Are they easy to install in a vehicle? Here’s what you need to know about this trendy new way of tracking how people drive.

What are Telematics?

Telematics is the process of using driving data in order to determine car insurance premiums. Unlike a traditional policy, which uses things like your credit score, address, and make and model of your car, among other facts, to determine how much you’ll pay for car insurance, telematics makes it even more personal by using your driving habits.

Many telematics insurance plans are considered “pay per mile.” This means that you’ll pay less for your policies if you don’t drive much, as opposed to having an open, blanket policy. As a result, your premiums will usually be lower, especially if you work from home or don’t spend much time on the road.

How Do Telematics Devices Work?

A telematics device is either built into a specific app that monitors your driving habits from a phone connected to your car’s Bluetooth system, or it’s a separate device that plugs into you vehicles OBD2 port, which is typically under the dashboard. The device measures a number of different things, including:

  • How closely you adhere to the speed limit
  • How often you brake quickly, as opposed to breaking properly
  • How far you drive every day
  • What types of roads you travel, such as side streets and highways
  • How fast you accelerate from a dead stop
  • How quickly you turn corners
  • What your general driving habits are like

Of course, there are other metrics that the insurance company may look at as well. However, these are the main ones that are a considering factor in your insurance premiums.

How Does Telematics Effect Your Insurance Premiums?

When it comes to including telematics data in your car insurance premiums, there are several ways in which this can go, such as:

  • Lowering Your Premiums – If you want a traditional insurance policy, but want to save money because you don’t drive much, are a safe driver, or both, then using a telematics device can work in your favor.
  • Raising Your Premiums – On the other hand, if you tend to drive a little recklessly, the telematics system will note this, and you could see your insurance costs rise.
  • Allowing for a “Pay Per Mile” Policy – If you aren’t on the road much and spend much of your time driving to local places, then this type of policy will use your telematics to save you money.

Choose Spivey for Your Insurance Needs

Are you looking for a car insurance policy that’s based on telematics? Want to learn more about these clever devices? If so, then reach out to Spivey Insurance. Our knowledgeable agents can explain more about telematics and help you find the best possible insurance policy for your needs.

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