Is the future of auto insurance in telematics? For years the auto industry has been using the same set of information to determine a driver’s risk and therefore the price of their auto insurance coverage. However, the introduction and popularity of telematics could be the one thing that changes it all.
Allow the insurance experts at Staples & Associates Insurance to cover the basics of telematics, and how it may affect the future of auto insurance.
What Is Telematics?
Telematics is giving insurers more data on driver behavior than ever before, but what exactly is this technology that’s sweeping the world of insurance? Essentially, telematics systems gather data including vehicle location, driver behavior, engine diagnostics, and vehicle activity, and share this data with insurers or commercial fleet companies.
This data that insurers now have on driver habits and behaviors can now be used to influence policy pricing and coverage options. Today, many drivers understand that their driving history, vehicle type, and age, among other factors, contribute to how much they pay in insurance policies. Leaving today’s drivers feeling less in control of how much they pay than ever before.
To combat these rising issues, many insurance companies are making the switch to usage-based insurance models. These models rely less on generic information and replace it with real-world data to measure dangerous behaviors to calculate the risk of each driver. These stats relay information such as:
- Rapid Acceleration.
- Excessive Speeding.
- Hard Breaking.
What is the secret sauce in determining the risk that telematics is missing the mark on? Distracted driving behaviors. Since these models track only what the vehicle is doing, and not the person behind the wheel. However, where smartphones created a problem- they’re now offering a solution. Smartphone sensors are now being used to detect device usage while driving.
What Telematics and Behavior-Based Insurance Means For You
Drivers and insurers are on the cusp of being in an advantageous position to better understand how actual behaviors can affect policy pricing. Insurers can now take better stock of risks, and drivers can track their own driving habits to reduce costs and improve safety for everyone out on the roads.
This means that the future of auto insurance is showing signs of rewarding safer driving and being more affordable to those who take it easy on the road.
Have questions on the future of auto insurance? Speak with the insurance experts at Staples & Associates with any questions that you may have!