Many automobile insurance policies offer the option to install a device in your car that tracks your driving habits. These devices are referred to as “telematics” and most major automobile insurance companies offer them in exchange for the potential of reduced premium rates. These devices are attached to the car’s OBD-II port and collect data from the car’s computer. Insurance companies program them to monitor details such as when the car is used, the distance the car is driven, the car’s speed, the car’s braking patterns, and the car’s location. Below are some of the pros and cons of installing a telematic device in your car.
Pros of Telematic Devices
First, these telematic devices offer the potential for lower premiums. This is the primary benefit of having this type of devices installed. For drivers who have good driving habits, they can benefit by being charged with a more precise premium tailored to their safe driving.
Secondly, these tracking devices allow insurance companies to more accurately estimate damages in the event of an accident. Data collected from the car allows the insurance company to more accurately recreate accidents and estimate the compensation you are owed in the event of an accident.
Lastly, another pro of telematic devices is safety. If the device installed in the car tracks location, it will be much easier for the police to find. Accordingly, theft and accident-related insurance costs may be lower.
Cons of Telematic Devices
The biggest concern of using a telematic device is privacy. By installing this device drivers unquestionably give up some privacy. While these devices are programmed to track different details, the most invasive metric tracked by insurance companies is the car’s location. For some, sharing this information with insurance companies can be too invasive for the offered benefit.
Additionally, the raw data collected by the telematic device is not necessarily a good indicator of driver safety. Insurance companies have their own definition of what they consider “safe.” For example, many insurance companies consider sudden braking events an example of dangerous driving. However, for people in urban areas, frequently hitting the brakes to avoid hitting pedestrians another car may be a routine occurrence. A telematics device does not distinguish between safe sudden braking and unsafe sudden braking, and this could actually cause your premiums to increase.
Finally, the discount offered by the insurance companies for installing the device may not be worth it. In 2016, a Pew survey found that many drivers who used the telematic devices never received the premium discounts promised. Or, if drivers did receive a discount, it was much less than anticipated.
In conclusion, installing a telematic device could benefit you if you are a safe driver and are comfortable giving up your privacy in return for a potential discount on your car insurance premium. However, you should always make sure that your insurance company will not raise your premium if you choose to discontinue using the device. For drivers with less than stellar driving records, installing a telematic device is probably not the best course of action.
Wittmer|Linehan understands insurance companies and are here to help you better understand your rights. No matter how safe of a driver you may be, there are always drivers on the road who are careless and who have the potential to cause serious accidents. Our attorneys and staff are here to protect the interests of victims and their families in the event of serious injury or wrongful death resulting from an accident. Contact us for a free consultation to discuss your case at (941) 365-2296.