Telematics and car insurance: what is it, and what are the benefits?

Today’s vehicles are some of the most technologically advanced, making driving both safer and easier. High-tech sensors and automatic manoeuvres also make for a more pleasant experience behind the wheel. 

One of the biggest leaps in vehicle technology has been the use of telematics, which is a telecommunications technology that uses diagnostics and GPS to record movements on a computerized map. This might include how fast a car is travelling, how and when a driver brakes and accelerates, and a vehicle’s exact location. Telematics is especially useful for fleets of vehicles, such as delivery trucks, in order to provide accurate tracking information to customers. And it’s even been used for years in racing series, such as Formula 1, as a means of tracking where opponents are on a course. 

When it comes to car insurance, however, telematics is used to monitor real-time driving behaviours and either reward or penalize drivers based on the information that’s reported.

How do car insurance providers use telematics?

According to the Insurance Bureau of Canada, telematics first made its way into the world of auto insurance in 2013. Many car insurance providers today will offer a discount to drivers who agree to use telematics as part of their policy agreement — either by installing a small device somewhere under the dashboard or by downloading a mobile app. Your insurance company will then be able to collect information about your driving habits and provide discounts accordingly. 

In this sense, telematics acts as a sort of spy for the insurance company. It can relay how aggressively you accelerate, brake, and whether or not you signal before making a lane change. Your insurance provider can then use this information to determine your rate and coverage. 

Telematics programs are optional in the world of car insurance. When it comes to determining your premiums, an insurance provider considers a slew of factors, including where you live, your gender, and your driving history. This information can result in premiums that seem higher than they should be for otherwise “good” drivers. Using telematics can allow for an evaluation of your individual driving habits in order to result in a fairer premium. 

Some insurance companies offer usage-based insurance policies (also known as “pay-per-mile insurance”). Telematics can provide a more accurate means of tracking your mileage for these types of policies as well.

Using telematics to save money on car insurance

For those with a by-the-book, less aggressive driving style, the main benefit of telematics is that it can prove to your insurance company that you’re a safe driver. With a more accurate understanding of the risk a driver poses when behind the wheel, your insurance company can customize a more appropriate rate. 

Telematics also comes in handy when it comes to determining fault, too. Should you be involved in a collision or other accident, any insurance company involved can use the data collected via telematics in order to more accurately assign blame in cases where more than one vehicle is involved. 

Telematics can also provide drivers with real-time information about their mileage and driving habits. Drivers can then use this data to become more aware of their driving habits and make any adjustments for safety or fuel savings accordingly.

Finally, a driver who knows their behaviour is being recorded and reported to their insurance company is also more likely to drive in a safer, less aggressive manner, which could potentially cut down on their number of accidents and insurance claims, as a result. 

To find out whether your insurance provider offers a telematics discount, simply give your broker or agent a call. It’s also in your best interest to do some comparison shopping online to see what your discount could be for agreeing to install a telematics device in your vehicle or an app on your phone that gives the insurance company permission to track your driving behaviour. You could save up to 30% or more on your premiums, depending on the provider.