Advantages and Disadvantages to Driver Monitoring

In an ever-evolving world of mobile technology, analytics and privacy concerns, the old adage that the only constants in the world are change and taxes (and possibly insurance) still rings true. Technology is continuing to redefine our culture and modify how we interact with the rest of the world, both locally and globally – and now this trend is trickling into the world of auto insurance.

What is Telemetrics?

Telemetrics or telematics is a driving monitor installed onto your phone or your vehicle that tracks your daily driving habits including but not limited to: braking, acceleration, times of the day vehicle is driven, total miles driven and sometimes, location.

Most large auto insurance companies are now offering discounts to drivers who are willing to install these driving monitor applications.

As seen in the article “Buffett’s GEICO follows rivals, launches telemetrics offering”, insurance giant GEICO is the latest company to follow the trend of introducing “telemetrics”, called DriveEasy, to their list of offerings. In short, this service tracks driving habits and gives individuals a score and tips to improve driving. The use of telemetrics has proven to be profitable for some companies, like Progressive: one estimate, per the article, has policies that use telemetrics to be 15% to 25% more profitable than ones that don’t. Travelers, Providence Mutual, Metlife, Progressive, SafeCo, Nationwide and  are also boasting success with theirs. Companies are offering discounts anywhere from 5% all the way up to 25% on premiums. This is a very attractive option to save money… for a safe driver.

Who are the best drivers? People who don’t drive much! Retired folks under the age of 75, who are tech savvy enough to install and monitor an app are great candidates. People who don’t partake in nighttime excursions are also better candidates than ones that do. Speed racers need not apply.  Parents might enjoy this type of device for their Teen driver. Businesses with livery or delivery services may truly benefit from knowing what their drivers are doing and how they are driving.

Even if you are not an expert in telemetrics, one can assume as consumers that companies in general, will direct their businesses towards greater profit; making it a reasonable assumption that they will push policies that make use of telemetrics in order to maximize profits and reduce overall risk. This may be cause for alarm to potential insureds due to the threat of privacy concerns and possible higher insurance rates. Although many companies, such as SafeCo, do their best not to track location but to focus on hard braking, acceleration, nighttime driving and total miles driven for a max of 90 days, no longer.

One might wonder what insurance companies can and will do with this data; could it increase auto premiums for all drivers regardless of whether or not they have these devices? Could it also affect premiums of other policies such as life or home policies? Some companies already charge a premium for an At Fault Auto Accident on their homeowner’s policy because studies show that they are more likely to put in a claim than others

Some readers may feel that a reduction in cost of their insurance policy is worth a few months of driver monitoring. Just be mindful that the adverse can also be true that if the tracking shows poor driving habits, your premiums will increase as a result of it. So definitely think long and hard before signing up.  No two drivers are alike so our only advice is: be an informed consumer. First make sure what the rules are and understand what your existing insurance policy covers before committing to a telemetrics program.

The great thing about having an independent agent as opposed to a direct writer is that they have access to all kinds of companies, programs, discounts and rewards they can suit to your individual policy needs. They can do the homework for you since we aren’t all insurance experts. Call your independent agent today!

Svendsen Agency offers Telematics with many of  its carriers. Call today to hear more.

Offering Auto insurance to New Haven, Hartford, Litchfield, Fairfield, Middlesex, Windham New London and Tolland county. 

(203)397-3993

www.svendseninsurance.com

 

 

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