In the past, automotive insurance companies have always incorporated customer data into their decision-making process when offering insurance premiums. Crude data like age, mileage, location or occupation among others, have influenced pricing for customers.
Currently, there exists a growing trend in the industry of auto insurance, where insurers offer an option to install a device to track your driving habits. This car monitoring device is in line with other ways in which insurance companies are trying to stay up to date with technological advancements. According to an infographic from Carsurance.net, 16% of insurers buy and sell services to Fintech companies, and 84% of insurers will increase Fintech partnerships over the next 3-5 years.
These tracking devices are otherwise known as ‘Telematics’ and the majority of insurance companies now offer them to their customers. In return, a prospective customer can get reduced rates. The devices are attached to your car via a special port, and then data is collected from your car’s computer to monitor your speed, mileage, breaking patterns, locations, or some other available metrics.
Now, the big question is, Is this all worth it? Is installing one of these strange devices worth the potential lower premium rates? We will analyze all of the pros and cons of installing a car insurance monitoring device.
We start with the advantages. Here, we will examine the ways in which installing one of these devices from your insurer could be beneficial for you:
1.It Helps You Drive Safer
There is no doubt that the awareness that there is a device monitoring your driving habits would end up making you drive much safer than you normally would. This could be an advantage because the tracker in your vehicle could help you avoid driving dangerously.
The car insurance monitoring devices store data from your driving habits such as speed and braking patterns, which are later sent as information to your insurance company. The knowledge of this mechanism in place would definitely have a positive influence on the driving habits of any driver out there.
2.You Get a Car Tracker for Free
In terms of safety, this is another big plus. These car monitoring devices are usually fitted with tracking systems that help you locate the vehicle at any instance. This can come in very handy, helping to locate your car if it has been stolen or if there’s been an accident.
In addition to this, it can also be used for monitoring teenagers behind the wheel, also influencing them to drive carefully.
Last but by no means least, is probably the main reason for considering this offer: a lower insurance premium. Relating your insurance premium to your driving habit means your insurance company can be very precise with the amount they charge you. That means if you are a good and safe driver and you take up the option to install a monitoring device, there’s a high likelihood that you would get a much lower premium than you normally would without it.
Also, some insurance companies offer an option to pay by mileage. The trackers are equipped with the ability to detect how far you have driven. This means that if you do not drive your car very often, you could be in for some big, big savings. However, if you drive around a lot, this option might not favor you.
All the positives seem great, but it’s good to remember that there are a few drawbacks if you want to take up this option. Next, we will consider the disadvantages of installing these devices:
No one enjoys feeling watched. The first big drawback of the tracking devices is the privacy issues attached to them. The devices hand over all the collected information about your driving habits to the insurance companies. These include your location history, details of your driving history, and vehicle mileage.
If you’re mindful of where your information ends up, the potential use (or misuse) of the data collected from your car, then you might want to rethink getting that car insurance monitoring device installed.
Data may not always tell the full story. You can be very confident in yourself and your abilities as a safe driver, but your insurance company could have an algorithm that computes premiums with a different description of what ‘safe’ implies.
For instance, some insurance companies classify sudden braking as a characteristic of dangerous driving. But then you could be driving in an area with high congestion rates, which would mean you could break suddenly to avoid a collision and still be driving extremely safely. This example is one of many that highlight the technology’s inability to distinguish several different scenarios that could have the same underlying data collection property, and this could affect your rates negatively.
3.Additional costs and fees
One last thing to consider is whether or not there are additional costs attached to installing this monitoring device. You should check with the insurance company to ensure there are no extra installation costs. If there is, you’d have to weigh this as well when comparing the overall cost of your insurance premium.
Also, there is a possibility that your rates could go up. If you are rated as a bad driver by your insurance company because of the data collected, there’s a likelihood that your insurance premium could increase. You should check your potential deal to make sure you know if this could potentially apply to you.
In conclusion, after you weigh up the pros and cons of installing a car insurance monitoring device, it becomes clear that the decision to take up the ‘Telematics’ offer from insurers boils down to the individual involved.
You need to consider all the factors in play, as well as the details of the deal offered by the insurer. Also, it is important to think long term. For example, does the discount still apply 6 months into the deal? And after a year, do the terms remain the same? All these need to be taken into consideration.
As long as you are fully aware of the implications and possible demerits of either choice, each decision has its merits which could favor you!