Telematics – a method of monitoring a vehicle. By combining a GPS system with on-board diagnostics it’s possible to record – and map – exactly where a car is and how fast it’s traveling, and cross reference that with how a car is behaving internally.

What does that mean for your Automobile Insurance?  It might not mean anything now, but it seems to be the way of the future for Insurance Carriers. Some companies refer to it as UBI, or usage based insurance.  Some call it Black Box insurance.  Other companies just simply give “their” product a name, such as Snapshot, or Rewind.  What it does, is report to the Insurance Carrier, when you’re driving, how fast you accelerate, and how hard you brake.  There may be some who object due to the invasion of privacy, but the transmitters do not track where you are going, just the behavior of the vehicle while it’s be operated They gather this information by sending you a small transmitter you plug into your vehicles OBD-II Port.  Current programs require you to leave the device in your vehicle for a certain amount of time, and that vehicle needs to be driven for a set minimum amount (meaning you can’t place it in the car that sits in the garage 360 days out of the year).  The device transmits the information back to the carrier, and the information is processed.

Some people qualify for a discount, or for an accident to be forgiven, and some do not.  As of right now you cannot be penalized if you do not meet the programs qualifying criteria.  The future though, may hold different results.

Many Companies are currently using “predictive modeling” to calculate rates for individuals.  They take characteristics of your area, claim frequency, age, marital status, and about 1,000 more indicators to determine your rate.  This may be done away with, if the insurance carriers are able to capture real-time information.

The “I don’t know why I have to pay for my neighbors claims” mantra could be gone.  Your rates will be solely based on your driving habits, and your claims.  You would be receiving your “individual rate”.  While having to install a device on your vehicle might seem intrusive, or a pain in the rear, studies show, it does lower insurance costs, along with lower the number of accidents that happen.  People tend to drive a little less careless, when they know they’re being monitored.

Is Usage Based Insurance the finite way of the future?  There is no way to predict it, but it does appear as if the industry is trending that way!


Dan McGinty, Agent


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