Insurance companies are always working to find new ways to determine insurance rates. Insurance has always been an industry of data: the more data, the better. Insurance companies know that the most dangerous driving demographics are teenagers and senior citizens. And they know that Iowa has anywhere from 300 to 400 driving fatalities every year. But the issue with data is that it is only as accurate as it is granular. While they know “teenagers” may be a risk, they don’t necessarily know whether an individual teen is a risk. That’s where telematics comes in.
How Telematics Works
Telematics uses a device to track a driver’s habits. Let’s go back to that teen. Perhaps you have an extremely conscientious teen driver. You’ve put your teen through extensive driving lessons, and you’ve driven with them enough to know that they are a safe, defensive driver.
So, you go to an insurance company, and you find out that the insurance premiums are going sky high! It’s because they believe that anyone from the ages of 16 to 20 is a huge risk. But what about telematics?
Your insurance company can give you an app that you download on your teen’s phone. From there, the app tracks how safe a driver they really are. And once the insurance company can see that they are, in fact, a safe driver, they can lower their rates.
The Benefits of Telematics
So, a lower rate is one of the major advantages of telematics. But your teen is also going to be a safer driver because they know they’re being watched. And if you have a telematics device in your car, you might find yourself being a safer driver, too.
No one chooses to drive dangerously or drive high risk. But it’s very easy to forget a speed limit or to stop paying attention. A telematics device gives you feedback about your driving and helps you (and the hypothetical teen) correct themselves as needed.
Telematics systems can also correct for other things, such as how frequently you drive. Your demographic may drive around 30 miles a day on average, but you might only drive 10 miles a day on average. That short commute of yours can save you money.
Finally, telematics can be used for claims, too. You might want to be able to show that you weren’t speeding if someone says you were speeding, for instance.
Many companies today use telematics systems, though they may call it something else, like a “Safe Driver App” or a “Safe Driver Discount.” Progressive, Travelers, Safeco, and Nationwide are all companies that use these systems.
Some telematics systems are just an app that you download. Others are more rigorous: you can plug them directly into your car. The devices that are plugged into your car will be even more accurate.
If you’re interested in getting bonuses for your safe driving, you may want to look up companies that are using telematics systems. This is especially true if you are in a demographic in which you’re considered to be a higher risk.
Are you interested in learning more about telematics? It’s time to give us a call. Contact us at Midwest Insurance to find out more.