Many people are looking for ways to reduce their monthly expenses so they can put more money toward paying off debt, saving for retirement, and other priorities. If you want to save money, telematics may help you shave a significant amount off your car insurance premiums.
What Are Telematics Programs?
Telematics devices are used to track drivers’ behavior. Some insurance companies gather telematics data via a plug-in device or a mobile app, and some car models have built-in telematics technology.
Devices can record things like when an individual drives, how far the person travels, and whether the driver suddenly increases speed or slams on the brakes. Insurers analyze data collected to figure out how risky a particular motorist is compared to other drivers. The insurer can then set rates based on that specific individual’s risk profile.
Several large, nationwide insurance carriers offer customers the option to use telematics to customize their rates. Some smaller insurance companies are also embracing the trend.
Why Do Insurance Companies Use Telematics?
Insurance premiums are based on a number of factors, such as age, gender, and how many miles an individual drives in a typical day or week. Those factors help insurance companies figure out how risky drivers are, but assessments are based on averages and generalizations. With telematics, insurers can gather information about specific individuals and deliver customized pricing.
That means that people who drive less than the typical customer, who drive outside the busiest times of day, and who practice safe driving habits can enjoy lower premiums. Depending on the individual customer and the specific insurance company, the savings may be substantial.
How Can Telematics Save You Money?
Some insurance companies track the number of miles customers drive and use that information to determine premiums. When an insurance company sets rates based on vehicle usage, it usually charges a base fee per month and adds a small amount for each mile driven. This may be a good choice for you if you’re retired or work from home and you don’t drive much.
Other insurers monitor driving habits, such as speed, sudden braking, cellphone usage, and the time of day when an individual drives. Customers with safe habits can receive a discount on their premiums. Different companies weigh some factors more heavily than others when determining individual rates. Behavior-based telematics may be a good choice for you if you drive a lot of miles but practice safe driving habits.
Find the Right Car Insurance Policy for You
If you’re looking to save money on car insurance, Petruzelo can help. We can tell you more about telematics programs and help you find the best policy for your needs and budget. Contact us today to learn more.