At first, you may be worried about letting your car insurance company watch your every move and what that could mean for your car insurance rates. However, for most drivers, participating can actually help you save. Keep reading to find out more.
How Do Car Insurance Companies Track Your Driving?
Insurance companies use a technology called telematics to track every driver. They send you a small device to plug into your car’s diagnostic port. You leave it in, and it periodically sends data about how you drive back to the insurance company. The insurance company then uses the collected data to predict your chances of being in an accident.
What’s the Difference Between Telematics and Traditional Insurance Pricing?
Traditionally, insurance companies can only guess about your chances of being in an accident based on statistics. They look at factors like your age, your gender, the type of car you drive, where you live, your job, your credit score, your driving record, your claims history, and more. Across millions of drivers, this process is very accurate. For an individual driver who is much safer than their profile would suggest, it can seem unfair. Telematics creates a picture of your individualized risk by looking at how you drive more than at how other people drive.
What Are Auto Insurance Companies Tracking?
The first thing insurance companies are looking at is how much you use your car. If you take two identical drivers who drive in identical conditions except one drives twice as much, that driver is twice as likely to get in an accident during a given period just from driving more and having more chances to get into an accident.
Next, insurance companies want to know when and where you drive. Driving during heavy rush hour traffic typically has a higher risk of an accident than on a quiet Sunday afternoon with almost empty roads. If you drive late at night, you may have a higher chance of fatigue-related crashes or encountering a drunk driver. Similarly, it also makes a difference if most of your driving is on congested highways, busy city streets, or quiet country roads.
Finally, insurance companies are looking at how you drive as an individual. This includes things like braking, acceleration, speeding, and cornering. This can give them a good read on whether you take risks on the road or are a good defensive driver. While negative actions are sometimes out of your control, such as a hard brake forced by another driver, that goes back to how where you’re driving can change your chances of an accident.
What Happens to Your Rates if You Use Telematics?
Many insurance companies offer a discount just for signing up for telematics since the data is so helpful to them. In addition, the typical pricing structure is that you keep your original rate without telematics and then have a chance to earn a discount depending on your results. Other insurance companies are often using telematics to offer usage-based plans rather than a flat fee, such as pay-per-mile plans for less frequent drivers.
Talk to Your Insurance Agent
Your independent insurance agent can help you learn more about telematics and find the right program for you. Burstad Insurance is in Menomonie, WI, with additional locations in Chippewa Falls, Medford, River Falls, and New Richmond. Contact us now to get started.