Have you heard of “usage-based” car insurance? Or maybe “vehicle telematics”? It’s a buzzword that’s been hot in recent years but has been prevalent for around two decades. In essence, vehicle telematics are an opt-in program that drivers can choose to partake in which gauge auto insurance premiums via data relayed through plug-in devices/phone apps. In layman’s terms, vehicle telematics allow an auto insurance provider to price your insurance based on your driving behaviour.

Maybe you’re a really good driver, but you’re under the age of 25. Or maybe you recently moved to Canada and you’re experiencing higher rates due to the fact that you technically don’t have as much driving experience, even if you were driving for years prior to moving. What’s the solution? Telematics. Here’s what they are, how they work, and how they may benefit you.

What Are Vehicle Telematics?

Telematics may be provided as a phone app or, most commonly, as a little module that you plug into your car’s “Onboard Diagnostics Port” (or your OBD-II) which records data that can then be relayed to your insurance provider. Some insurance companies have upgraded to phone apps or plug-and-play alternatives to avoid having to use modules altogether.

Essentially, vehicle telematics are designed to record driving habits. Every insurance company will prioritize different variables, but these are some of the most common data points:

• How long a driver goes in a single distance
• How far a driver goes in a single distance
• How often a driver brakes hard or engages their anti-lock brakes/when their vehicle automatically triggers smart braking systems
• How long service lights remain on before an issue is remedied
• When impact is registered
• When airbags deploy
• How fast a driver accelerates after a stop
• How fast or slow a driver is going
• Engine data
• Positioning of your vehicle on the road
• Idling time

These data points, cumulatively, are meant to provide insights into a driver’s habits. If there’s plenty of hard stops, braking, etc., it might be a signal that you are driving distractedly. Moreover, if you manage to make it to a far away location in a short amount of time, your insurance provider may note that you tend to speed.

What Are the Benefits of Telematics Car Insurance?

Telematics insurance providers don’t want to penalize you for your behaviour with vehicle telematics insurance. It’s intended to provide a long host of benefits – not to hurt your chances of receiving lower rates, and certainly not because your insurance company doesn’t trust you.

Some of the benefits of telematics car insurance are as follows:

• Improved driving behaviours
• Receive insights about your current driving behaviour
• Accident detection dispatches help to you automatically
• Reduces your car insurance rates by up to 30%
• Peace of mind for parents with young drivers

Frankly, that’s only the tip of the iceberg. Vehicle telematics doesn’t cost you anything to opt into and there’s no strings.

What Telematics Insurance Does NOT Do

Telematics can be daunting to some drivers for a number of reasons. Many drivers believe that telematics tracks their driving behaviour via GPS, which simply isn’t true. Instead, telematics devices track your behaviour patterns, including gradual acceleration, speed, and harsh braking. For instance, a telematics device may record if you were to accelerate too fast at a green light, but it wouldn’t know where that event took place. It also won’t impact your vehicle warranty, as most telematics-based programs will use a phone app.

Telematics is something you can opt into, not something that an auto insurance provider will force on you regardless of your decision. It’s not about trust – it’s about rewarding you for your driving behaviour. The benefits to telematics-based insurance far outweigh the cons, but it’s always your choice – because it’s your insurance.

Usage-Based Insurance vs. Telematics

Usage-based insurance (UBI) can be used interchangeably with LMBF deals with well-known insurance providers who offer vehicle telematics insurance. Curious to know how much you can save by using telematics-based car insurance? Contact your LMBF broker today for more information on “pay-as-you-drive” or pay for the distance you drive, and it’s gained traction over the years as it can significantly reward drivers who don’t use their vehicles very often. Usage-based insurance can vary depending on the provider as every carrier may offer a different program, but typically premiums will be gauged based on how the vehicle is driven and where it is. It is usually powered by telematics – i.e., the technology being used to relay data to the insurance providers. Usage-based insurance is just the term for how premiums are calculated, whereas telematics or vehicle telematics are the technology that offer the data, and tend to come in the form of a mobile phone app or a plug-in module.

Want to Try Telematics Car Insurance?

Are you interested in trying out telematics-based car insurance? It’s a great way to start improving your own driving behaviours, reducing your risk of being involved in accidents, and receiving lower insurance premiums for good behaviour. Telematics can’t make a new or inexperienced driver into an amazing one simply by opting into the program, but it can certainly help reduce your odds of exhibiting risky behaviours – behaviours which would otherwise heighten your chance of being involved in an accident. Telematics programs improve the odds of more drivers practicing safe behaviour while out and about, and even reduces the odds of insurance fraud.

LMBF deals with well-known insurance providers who offer vehicle telematics insurance. Curious to know how much you can save by using telematics-based car insurance? Contact your LMBF broker today for more information.