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An In-Depth Look at How Telematics Impacts Your Auto Insurance Policy

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How Telematics Impacts Your Auto Insurance

According to the National Highway Traffic Safety Administration, the number of speeding fatalities and general car crashes has continued to rise over the years. Both the government and insurance companies are looking for ways to reduce these alarming numbers and to keep drivers safe on the road. Most insurance providers use multiple variables to figure out your auto insurance rates, wherein telematics plays a crucial role.

Here’s an in-depth look at how telematics affects your auto insurance rates.

Types of Devices Used in Telematics

Companies use different devices and methods to record your data. Some companies prefer to track data through your mobile phone, while others prefer to install a device on your car that will record data as you travel. Telematics systems are generally wireless. Popular devices include apps, Bluetooth, flash connectors, and OEM systems. Insurance companies use apps to track data through smartphone sensors. The app sends the data from your phone to your auto insurance company’s server. The apps measure speed, acceleration, and braking. Bluetooth devices use your phone’s network to send data to the insurance company. Flash connectors are plug-and-play devices that transmit your driving behavior, while OEM systems are built into the vehicle. Popular systems include OnStar and mbrace.

Analysis of Collected Data

Different telematics systems measure different functions based on the complexity of the device. Generally, OEM devices measure the highest level of data. Smartphones are the most difficult systems to use. 12 V connectors capture extra data points that are transmitted to the central database. Insurers recognize that there is concern among some drivers about a lack of privacy. These systems allow insurance companies to see when, where, and how you are driving. In the future, insurance companies plan to address the concerns that telematics gives away too much personal information.

Benefits of Telematics for Drivers

  • Lower Premiums

If you have an established history of good driving, you might be required to pay lower premiums. Insurance companies use telematics to measure driving traits and location instead of your address and credit score.

  • Consistent Feedback

You will receive timely reports and feedback based on the data generated from the system. Telematics can help you improve your driving habits and minimize the chances of an accident.

  • Protection Against Thefts

Telematics-based systems help track stolen vehicles. They also reduce the chances of theft by locking the ignition after the vehicle has been shut off.

  • Easy Claims Process

Filing a claim is easy, as the system provides the insurance company with real-time, accurate data.

Benefits of Telematics for Insurance Providers

  • Easy Risk Assessment

Telematics allows insurance companies to locate direct risks based on your driving traits quickly. Insurers can use the data to inform you of things to improve to reduce your chances of an accident. The data also makes it easy for companies to gain an understanding of a particular market.

  • Fraud Prevention

Telematics helps insurance companies reduce fraud by providing a detailed account of accidents. It is easy for insurers to figure out who is at fault in an accident.

  • Future Projections

Insurance providers often use the system to build a strong database for future projections. It also makes it easier for them to identify safe and unsafe drivers.

Fleet management systems enjoy telematics because it helps them identify the amount of maintenance required, give feedback to the drivers, and manage fuel consumption. Analysts point out that the creation of connected cars will allow companies to enhance their business. As electric vehicles start to dominate the market, telematics will become even more important in the days to come.

Research shows that telematics is beneficial for insurance companies, manufacturers, and fleet managers. As a driver, you can use the system to pay lower premiums, thus cutting down your auto insurance costs. The technology also helps you stay safe on the road. If you have any questions about how new technological advancements may impact your insurance coverage, the team at Reata Insurance Group is here to assist you. We can help you secure reliable auto insurance coverage in Texas today!

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