Telematics Car Insurance – What Is It?
In the most basic sense telematics car insurance is a type of cover designed specifically for young and learner drivers to help bring down the cost of cover, especially with the increasing cost of more traditional cover.
Thanks to GPS technology car insurance firms can now track the car's move, location, speed, braking and acceleration patterns, the time of day / night it's being driven etc.
But how does this benefit the policy holder?
Not all telematics insurance schemes are built in the same way – some of them track the time of day or night the car is being driven. One firm, for example, uses the device for this very reason. They ask that the young driver refrains from driving between the hours of 11pm – 5am (the red hours). The simple reason being that statistically young drivers are at more risk of being involved in an accident during this time of night.
As long as the motorist agreements not to drive during the red hours they are owed to a discount of up to 25% on their car insurance policy. However, if they do drive during the red hours they incur a £ 100 charge. An incentive to stay safe and off the road late at night.
The firm in question also offers up to 40% discount when the customer comes around to renew their car insurance policy – as long as they have exhibited good behavior during the policy term.
Other telematics insurance firms adopt a variety of different methods but the most common one is what's known as "pay as you drive" car insurance.
The pay as you drive scheme works in almost the same way as a pay-as-you-go mobile phone contract. The motorist pre-pays a set amount for limited mileage – if they want more mileage then they simply top-up their account. Whilst this may appear cheap in the long-run it could prove costly – especially if the young driver uses up their mileage quickly. However, insurance schemes like this could also benefit the customer as they do reward good driving behavior and will offer what's known as "bonus miles" if they exhibit responsible driving while on the scheme.
Both types of policies have their up and down-sides and not one policy will suit everyone. It really is down to the young driver (and possibly their parent) to make that decision.