Auto Insurance Telematics: Is it the Right Choice for You?

Usage-based insurance is here to stay, but it can take several forms. Some insurers go the extra mile by charging for insurance by the kilometre. However, a simpler form of usage-based insurance measures driving habits to help determine auto insurance rates. The process is called telematics and uses an in-car device to measure criteria that can affect driving safety.

How does insurance telematics work?

Telematics tech continues to evolve. Earlier iterations used a device that plugged into your vehicle’s on-board diagnostics (OBDII) port. Later versions used a beacon that identified your vehicle and then communicated through a phone app. These methods still exist but many telematics devices often just exist as a phone app now as insurers work to make the technology more accessible.

The device or app collects data about your driving habits, such as:

  • Where you drive

  • When you drive

  • Sudden stops

  • Swerving

  • Driving speed

  • Time of day

  • Miles driven

Not all systems collect the same data, but you can expect some overlap amongst insurers. Data collection also looks at frequency of events, so if you swerved suddenly last Tuesday to avoid a squirrel in the roadway, that event is weighed against all the careful driving you have done. Insurers consider the big picture.

Based on the data collected, safe drivers can earn an extra discount on auto insurance. Many insurers also offer a discount as an enticement to get started with telematics.

Regulations can vary by province, and business practices can vary by insurance company, but in most cases, a less-than-perfect driving safety score will not cause a rate increase. Instead, you may not earn an extra discount. However, you should also be aware that telematics devices can track mileage, possibly causing rates to increase if your mileage usage increases.

How much can you save with an insurance telematics device?

Discounts can vary by insurer, but savings can be significant for safe drivers. Insurance telematics devices can give you more control over your insurance rates, often allowing you to check your progress online or through a mobile app. If you would like to learn more about insurance telematics, contact us for more for details

Auto Accident Risk by Age

In many cases, younger drivers pay more for auto insurance when compared to older age groups. While this can make things seem as though insurers are discriminating against young drivers, higher accident rates suggest higher risk for younger drivers. We usually become better at driving (and most other things) with more experience. Some insurers also place similar (higher) rates on drivers with less than 3 years of driving experience — even if the driver is in an older age group. However, age and experience often correlate, so younger drivers often pay more for coverage.

Let us explore some statistics.

According to the insurance information Institute, a study from 2018 shows the following data regarding fatal crashes:

  • Drivers aged 16 to 20 were involved in 34% of all fatal crashes

  • Drivers aged 21 to 24 were involved in 33.5% of all fatal crashes

  • Drivers aged 25 to 34 were involved in nearly 27% of all fatal crashes

Older age groups were involved in 20% or less of all fatal crashes, with the lowest involvement being for those aged 65 to 74 who were involved in only 15% of fatal crashes. Of note, the total number for all age groups tops 100% because fatal accidents often involve more than one age group.

Non-fatal accidents follow a similar pattern, with less-experienced — and often younger — drivers involved in a higher percentage of accidents when compared to older and more experienced groups.

Higher rates for younger or less experienced drivers are common, but many insurers offer ways to make rates more affordable. For example, many insurance companies offer a good student discount which can help reduce rates for younger drivers who maintain good grades. Some insurers also offer discounts for completing a driver safety course or for demonstrating safe driving habits verified by an app or an in-vehicle device.

If you have not reviewed your coverage and rates lately, reach out to your agent or broker to schedule a review. A policy review often uncovers ways to save, but just as importantly offers a way to be certain you have the right coverage in place.

Have any questions? We can help.

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