As anyone who’s bought a relatively new car within the past few years can attest, electronic gadgetry has completely revamped the driving experience. The tools surround you when you hop in the car…from GPS navigation that plans your travel to in-board internet access keeps you current on a trip, from satellite-based radio services providing continuous entertainment to services that can remotely bail you out when you lock your keys in the car, from dash boards that remember who you are and how you like your seat positioned to something called “Bluetooth®” that lets you communicate without taking your hands off the wheel. The options just keeps growing.
But alongside all of this spectacular electronic is yet another gizmo that has been steadily, perhaps quietly gaining traction among drivers. It’s a telematic device being promoted by insurance companies offering usage-based insurance (UBI) options to customers seeking a break on their insurance premiums. A popular example of this technology is the Snapshot® device offered by Progressive Auto Insurance as part of their Pay-As-You-Drive® program. Other examples are Drivewise® from AllState and State Farm’s Drive Safe and Save™. The State Farm is a bit different, since it integrates with installed communications technologies like On-Star or SYNC to record the data. Regardless of the approach, is likely that the use of these technologies will become commonplace in the years ahead.
Telematic devices plug into your car’s diagnostics port (usually found in the vicinity of the steering column) and tracks the car’s on-the-road experience. In other words, the device records not only how far the car is driven, but how the car was handled while being driven. Electronic readings of speed, braking, and time-of-day driving are captured and transmitted wirelessly to your insurer’s home office, where the data is used to construct a risk profile for the car.
Use of telematic driving monitors is optional, of course, but their growing popularity is tied to discounts that are made available to drivers who record what insurers determine to be a “safe driving/low risk profile.”
So, discounts are great, but are there any downsides to the concept of telematics monitoring for drivers? Clearly there are obvious solid benefits, like more accurate matching of insurance premiums to risk, the potential for more attentive driving as motorists become sensitized to how their habits are measured, and lower premiums and deductibles for insureds. On the flipside, though, many consumers are concerned about privacy issues (that is, allowing insurers to compile data on how you drive), although some feedback indicates that consumers may feel the discounts are worth more than the loss of privacy.
Telematics will undoubtedly become a fixture in the automobile insurance world, and the pros and cons will likely shakeout pretty quickly as more and more insurers offer the technology.
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