How Telematics Can Save You Money With Usage Based Insurance
With prices quickly rising in many areas, most people are searching for places to save money. One of these places may be with your auto insurance. Improvements in technology, called telematics, now allow insurance companies to offer policies based on your driving ability and usage. Precisely what is telematics, and how does usage-based insurance work? Read on for additional information about the cost-savings changes in auto insurance coverage.
What Are Telematics?
Many newer vehicles now come equipped with onboard communication devices. These devices use GPS to communicate with other computerized devices. Telematics allows the tracking of your vehicle by various automotive services.
Telematics allows the police to find your stolen vehicle, and you can call for help by pushing a button in case of an accident. Telematics plugged into your vehicle's diagnostic port also reads all operational data, including any error codes your vehicle is experiencing.
How the insurance company collects your driving telematics varies among companies. Some companies use systems already installed in your vehicle, others offer plug-in devices, and others use a smartphone app or tag. Some companies offer you a choice of devices and allow you to choose which telematics are tracked.
Once the tracking device is in place, it tracks your driving habits. Once you complete this period, the company calculates your score and offers you a discount. Your safe driving can earn you further discounts the company will calculate and offer annually.
What Is Usage-Based Insurance?
Usage-based auto insurance tracks your driving telematics. Some of these include:
- Speeding
- Acceleration
- Braking
- Mileage
Usage-based auto insurance also tracks the time of day you drive, the miles, and your phone use while driving. Based on these metrics, the insurance company will issue you a driving score that determines your rates. The better you drive, the higher your score. The higher your score, the more significant of a discount you receive.
Telematics does not determine your premium alone. The insurance company still considers many other factors. These factors include:
- Your driving record
- Make and model of your vehicle
- Your gender
- Where you live
- Your credit score
Some companies even factor in your marital status. While these factors will not change, switching to usage-based insurance can offer significant savings and is worth pricing out.
Most major insurance companies now offer some type of usage-based insurance plan. For example, Nationwide car insurance coverage provides a couple of different programs that might be able to save you money.
