What is Telematics and How Can it Help You Save Money?

 By Diane Tait

If you’ve purchased a new vehicle in the past five years, you know that there has been a quantum leap in onboard technology.  Gone are the days of analog controls and in has come digital automotive technology.  Nowadays, everything from onboard GPS systems and reactive cruise control to drive-by-wire technology has made every vehicle on the road more like driving a computer with four tires and a steering wheel than a car or light truck.  While the technology is designed to improve driving safety and fuel economy, what has been used to augment our driving experience has taken a new turn by using the same tech to monitor and improve driver and vehicle performance.  While some drivers look at what’s known as telematics as a kind of electronic leash, others are all too happy to avail themselves of technology that can save money and lives.

While telematics is relatively new to consumers, it has been in vogue with industry for more than a decade. – Commercial trucks and fleet vehicles were the first to employ telematics.  The ability to automatically deliver telemetry wirelessly enabled trucking companies to collect data on everything from vehicle use to maintenance and service requirements.  It also provided information on the location of vehicles as well as the habits of their drivers. This allowed commercial operators to seamlessly monitor, manage, and analyze the productivity and profitability of their entire fleet.  

Is telematics nothing more than a vehicular nanny cam? – It isn’t difficult to understand why trucking companies quickly embraced the technology.  Not only do fleet managers want to know where their vehicles are and when they are likely to be sidelined for maintenance, but telematics gives them the ability to monitor the metrics of their drivers in real-time.  It literally lets them see how long and how fast their employees drive their vehicles.  It even provides data on braking and how often their drivers take breaks.  More than merely a nanny cam, the data received via telematics has led to major changes in the industry. Since fuel, maintenance and insurance are three of the expenses that trucking companies have to absorb, being able to monitor and train drivers to maximize these metrics can lead to significantly lower operating costs. 

Can telematics benefit consumers? – While some drivers are reluctant to have their driving habits monitored, others have embraced the concept.  If you drive a late model vehicle, you can opt-in to participate in telematics.  Why would consumers want to have their driving habits scrutinized?  Let me count the ways:

1.      Safety is job number one. – Whether you drive your vehicle exclusively or allow others to get behind the wheel, telematics can provide an owner with data about how long and hard their vehicle is driven.  Everything from seat belt use to a digital blueprint that shows how you and other drivers accelerate and brake can provide empirical evidence of how safely your vehicle is driven.   

2.      Want to save money on the operation of your vehicle? – Every driver is always looking to save money while keeping their vehicle in tip-top shape.  Telematics can help you do just that by collecting and reporting data on such things as fuel consumption, brake wear, battery condition, coolant and oil temperatures, powertrain functions, oxygen sensor problems, and much more.  This not only allows vehicle owners to have fewer breakdowns, but it allows them to analyze and adjust their own driving habits to reduce wear and tear on their vehicles.

3.      Want to save money on auto insurance? – Auto insurance is one expense that every driver has to bear.  Until recently, insurance companies were forced to lump all drivers into various categories based on everything from their driving record and age bracket to their address and credit report.  That meant that insurers had no way to sort drivers out to provide savings on an individual basis.  Telematics has changed all that.  Many insurance companies now offer customers a free telematics module that can be plug into the dashboard.  The device then compiles and reports on driving habits to the insurer.  While this sounds to some like an Orwellian plot, the beauty is that the data can only be used by the insurer to provide added savings to their customers.  They can’t be used to increase your cost.  I know this for a fact since I added such a telematics device to my vehicle several months ago and was told that the cost for my next renewal was going to be reduced by 7%.

4.      What else can you learn? – More importantly, I learned a wealth of information about my driving habits, vehicle performance, and long-term fuel consumption while using the module.  It didn’t just let me know whether I was a good driver, the reports I received during the monitoring period provided a wealth of information that I wouldn’t have been able to access on my own.  As a result, I was able to make minor changes in my driving habits which resulted in improved gas mileage and reduced maintenance costs.

Will telematics soon become the norm? – Since vehicles continue to get ever more sophisticated, it’s logical that telematics will soon be built into every vehicle at the factory. While this has some citizens to become concerned that their privacy could be compromised, bear in mind that the data produced by such technology is protected by the Fair Credit Reporting Act.  This means that the accuracy and dissemination of data provided by telematics is protected by federal regulations.  However, it will also mean that consumers will soon have unfettered access to much more data than they can now glean from the information provided on the dashboard.

Even if the Diane Tait owns and operates A&B Insurance.  To find out more about how you can save money on boat insurance, go to her site.