What is Telematics?
Telematics is a term that combines the words telecommunications and informatics to broadly describe the integrated use of communications and information technology to transmit, store and receive information from telecommunications devices to remote objects over a network. While these are primarily used in in the automotive industry, other industries have developed uses for telematics, as well.
Using communications-enabled devices, telematics can store, send and receive information that helps control remote objects, specifically in moving vehicles using navigation systems. The integration of Global Positioning System (GPS) technology into mobile devices and computers enables telematics to mark the location and communicate with a wide range of vehicles.
What is Telematics Insurance?
Telematics insurance is car insurance where a telematics box is fitted to your car. The telematics box (also commonly known as a black box) then measures various aspects of how, when and where you drive.
How does it work?
Telematics insurance works by fitting your car with a small device – commonly known as a ‘black box’ – that records speed patterns and distance travelled as well as the type of roads you are using, and when , by tracking Vehicle’s movement through GPS system.
The technology can also monitor braking and cornering to build up a picture of your driving style. Insurers then use this data to calculate the cost of your insurance and adjust your premium accordingly, with each aspect having an effect on the price that you pay.
For instance, not only will you be charged for the total number of miles you cover, you will also incur higher policy prices for driving during peak hours, when there is an increased statistical likelihood of an accident occurring.
The insurer will normally charge you an up-front fee, which includes the cost of the device and its installation, and then quote you a price for your annual premium which can decrease or increase month on month, depending upon your driving performance.
While the monitoring of driver behavior in this way may sound quite Orwellian, it should lead to a fairer pricing system that is based upon the individual rather than a generic set of statistically-based assumptions.
And, above all else, if the use of telematics technology encourages safer and more considerate driving, this should ultimately lead to safer roads for all of us.
Many of the countries like, UK and Italy are leading the way in the provision of telematics insurance, with the Italians having a particularly interesting slant on the use of the technology.