How Are Telematics Solutions Changing Auto Insurance? | | PayBima

With everything around us being driven by technology, why should insurance be any different? Indian insurance companies have recently adopted telematics solutions to provide accurate rates to various car owners. Let’s learn more about it and how it works in this blog.

Every car owner in India is required by law to buy car insurance before they start using their car on the road. This is done for the safety and interest of the owner and the driver of the vehicle. Now, when buying a car insurance policy, your insurance pays you a certain amount that you have to pay on a regular basis. In return, the insurance company provides you with the benefit of financial protection against any damage that may occur to the vehicle or injury that may occur to you.

Although these premium rates are almost the same (slightly different from one insurer to another), the insurance industry in India has recently been making strides with technology to change this. Telematics solutions are a good step in this direction. Here we discuss in detail what telematics means and how it can be useful for a person who has a policy on car insurance payments.

Definition of Telematics

In its literal sense, telematics refers to the field of computer technology that facilitates the transfer of digital data and information over long distances. This modern technology is now being revolutionized by the insurance sector globally, and India is also moving forward. Insurance companies are using telematics to monitor and track the route a vehicle takes (via GPS devices) and the distance traveled.

Also, with the help of telematics, the vehicle’s mileage and the condition of its engine can be accurately determined. With the help of this, insurers can choose the best rates for car insurance holders based on the length of their car. It is considered to be one of the most accurate criteria for determining car insurance premiums.

How Do Telematics Solutions Work for the Auto Insurance Industry?

When it comes to car or auto insurance, telematics is often referred to as user-friendly insurance. This simply means that the insurance premiums paid by car owners will be directly related to the use of their cars, for example, the distance traveled by the car.

This is a very accurate way to determine the best rates for different car owners and is seen as a welcome move by many car insurance holders. To find out how the car is used and its parts, insurance companies use technology called telematics devices. They are installed in the car to record the total distance traveled, the route, the driving direction, and more.

In some cases, the insurer can replace the GPS tracker with a telematics device (which serves the same purpose). Alternatively, law enforcement may also be asked to download a mobile app that helps track the vehicle’s movement.

Based on the data collected, the insurance company can decide the type of insurance for the car owner or owner. Note that since the premium price is directly related to the total distance of the vehicle, any increase in the specified distance (mentioned in the policy) may require the owner to increase the insurance to have a higher limit.

4 Benefits of Using Telematics for Car Insurance

Getting used to the latest and greatest technology is always in the best interests of everyone who uses it. The same rule applies to the insurance sector and where telematics is gaining momentum. These digital solutions have several advantages not only for the insured but also for the insured. Let’s look at some of them here.

  1. Telematics is especially beneficial for policy holders as it allows them to pay more for the usage of their vehicles. This helps them save a lot of money.
  2. It is very good for car owners as well. If their vehicle exceeds the mileage as defined in the policy, the owner can renew the insurance policy to adjust the mileage limit, or upgrade the policy to one that provides a higher mileage limit.
  3. Since telematics helps keep the car in constant motion, the car owner avoids reckless driving and accidents. This means that the limited opportunity to be insured by the insurance company.
  4. Some policyholders may also be eligible to receive rewards from the car insurance company such as additional discounts for driving safely. This is made possible by monitoring the vehicle owner’s driving behavior through a telematics device.

Read More: Things to Know About Four Wheeler Insurance in 2022

How Are Telematics Solutions Changing Car Insurance in India Soon?

Telematics is considered to be one of the best developments in the insurance sector, with several benefits for policy holders and insureds (as mentioned above). With the introduction of telematics, the car insurance industry seems to be moving towards a complete revolution in the following ways:

  • Valuations have become more accurate thanks to the technology of telematics solutions in auto insurance.
  • Lower premiums are given to car owners who drive safely, thus encouraging those with more rules to drive safely and avoid accidents.
  • This also means higher fines for reckless drivers.
  • Telematics has brought a fairer system to all car owners, ensuring that those who follow the correct rules are not forced to pay higher prices or suffer due to the carelessness of others.

Completion

Telematics is a common practice followed in many western countries; however, India continues to benefit from several benefits that this technology offers. With the slow but sure introduction of telematics solutions in the insurance industry in India, the sector is witnessing a major shift in the way it operates.

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