Should You Opt For A Telematics Car Insurance Plan
What is a telematics-based car insurance plan?
In a nutshell, a telematics-based plan monitors and rewards good drivers with a discount on car insurance premiums.
If your insurance provider offers a telematics-based plan and you’ve opted in, then your car will need to be fitted with a device that monitors driving.
Imagine being financially rewarded for behaving like a patient, conscientious, law-abiding driver, ‘beary’ interesting, wouldn’t you say?
So how exactly does a telematics-based plan work?
A device, installed in your car (typically at no extra charges), will track how you drive and analyse if you’ve observed speed, mileage and smooth driving targets.
If you hit these targets, you will then be eligible for your premium discount when renewing your car insurance plan. Simple as that!
There are other benefits too, which will be explored more deeply in the next section.
Why it could be a good idea
Is a telematics-based plan right for you? Here are some advantages of opting in to consider:
1. Immediate assistance for emergencies
Many telematics-based plans are equipped with emergency assistance alerts that are triggered if your car is involved in a serious accident.
Often, medical assistance, police and other relevant services will be alerted to provide aid if a severe crash is detected.
This is arguably one of the most important advantages of a telematics program as it helps to provide real-time assistance for a real-life situation.
Imagine getting stranded after a major accident and not being able to call for help. In such an instance, the GPS and alert system installed can be a life-saver.
Also, note that since these systems can track your vehicle, it may be able to detect and intervene (by alerting police) if an incident is occurring, as well as improve the chances of recovery for stolen vehicles.
2. Discounts on premiums
As mentioned above, the main idea behind a telematics system is to reward good driver behaviour.
But what exactly is “good driver behaviour” and how is it measured?
The specifics will differ with plans but in general, a good driver will maintain the legal (and optimum) speed level, hit mileage targets, accelerate smoothly and will not apply brakes abruptly.
Cheaper premiums are definitely #goals especially since detariffication. As insurance companies set their own pricing for new car insurance plans, premium prices are uncertain and could go up.
Thus, if you can get a good discount by simply driving safer, a telematics-based plan might be worth your consideration.
Also, the rise of telematics plans may indirectly reduce the overall cost of insurance premiums.
This is because, the program, as mentioned above, can help with vehicle recovery and theft issues, among others.
This means, insurance fraud could also see a decline, which may reduce the cost of insurance – and your premiums!
3. Can help promote safer driving habits
Accidents happen. But driver behaviour is most often the root cause.
Now if we operate on the assumption that people will behave differently when monitored or when a big discount is at stake, a telematics plan might help reduce accidents.
In other words, giving drivers another incentive, in the form of lower premiums and discounts – to drive safely will (hopefully) inspire conscientious driving habits.
With Malaysia’s high accident rate, we could stand to drive safer and help improve the safety of the roads for all users, all the while bringing down the cost of car insurance premiums.
4. Fairer premiums
With the detariffication of car insurance premiums for new policies in place, insurance premiums may be based on factors that may not be fair to certain drivers.
For instance, younger, male drivers may be charged a higher premium because they do, globally and historically, pose a higher risk for unsafe road habits like speeding, etc.
Now of course, we understand that all young males do not drive in the exact same way, but they may end up paying the same premium based on these general studies.
Thus, a telematics plan can help with an individual assessment of risk and determine premiums more fairly.
| See also: Do Driverless Cars Need Car Insurance? |
5. Potentially helpful for younger or new drivers
Following from the point above, if you are a new or younger driver, you may be subject to the same generalisations and charged higher premiums for a number of reasons.
Common risk issues with new or younger drivers are that they may lack the necessary experience to make good decisions on the road and are possibly prone to distractions while driving.
Whereas seniors may face issues like poorer eyesight and hearing or slower reflexes that impact their abilities on the road.
Of course, this will not be the case for every young, new or aged driver but a regular car insurance plan typically evaluates risks more generally.
Thus, a telematics-based car insurance plan could give younger, older or new drivers an opportunity to prove their low-risk status and enjoy lower premiums.
Is there a downside to a telematics-based car insurance plan?
While it’s true that a telematics-based plan has a few valuable advantages, are there drawbacks that we need to know about? Here are two main concerns related to a telematics-based plan:
1. Privacy matters
A telematics-based plan will monitor driver behaviour, essentially collecting data on drivers through a device fitted in the car.
The device is connected (to the insurance company or its affiliates) so it is able to transmit the necessary data and trigger emergency alerts as needed.
However, it’s a natural concern that this data might be mishandled or used against you in some way.
Also, do note that you may request to obtain the data for your defence in court cases or other legal issues.
At the same time, it could be handed over to the authorities if there is a legal obligation to do so (disclosure).
2. Not many choices as yet
Currently, only AXA SmartDrive Enhanced car insurance plan offers a telematics opt-in with AXA FlexiDrive.
This particular plan and add-on will reward safe drivers with bonus savings of up to 20%. It measures a safe driver on the basis of speed, mileage and harsh driving. For your reference, industry news have reported an average of 14% safe driving discount for those on AXA's FlexiDrive.
Interestingly, you won’t be penalised for poor driving and this means, your premiums won’t be raised if you are found to be a ‘poor driver’.
You will however, be given tips to improve your driving skills via its mobile app.
In addition, the fitted device and software equips the car with an Automatic Accident Alert, theft recovery, and a mobile app to check on the car’s status (e.g. ignition and battery).
Moreover, opting for this add-on device will not incur additional premiums.