The festival season is here and banks are waiting to give you a Bonanza. Banks have cut interest rates on car loans. Car dealers are offering discounts on new car models. Its celebration time and your dream car is within reach.Now, all you have to do is insure your car with a good insurer. I will give you a piece of good news. Safe driving will mean paying lower motor insurance premiums.
So, if you drive your car very carefully, do not drive during peak hours or even drive for a shorter duration, you might have to pay a lower motor insurance premium. Questions must be running through your mind. You're a great driver, but how will the insurer know this? Is there any way to measure your driving skills and give proof of this to the insurer? Let's find out.
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When you buy a car, you also have to insure it. Third party liability insurance is compulsory in India. This covers damage to life or property of a third party, by the insured car/vehicle. Own damage insures your car/vehicle against damage or theft. You also get comprehensive cover which also includes a personal accident insurance cover which covers you (driver/owner).
You must opt for a comprehensive car insurance plan which gives you both third party liability cover + own damage cover.
See also: Motor Insurance Terms You Must Know
Telematics uses GPS and mobile devices to send and receive information and it is mainly used in the automobile industry. This device known as a black box will record your speed patterns, type of roads you drive, whether you (owner) are driving or your driver, whether you drive at night/day or on weekends/weekdays. This device even records how you apply the brakes.
Your driving data is collected through a smart phone and an on-board diagnostic port. This black box then sends all this data to the insurer. The insurer will charge a fee to install the telematics device and quote the annual motor insurance premium. This motor insurance premium will increase and decrease depending on your driving skills.
Your driving skills determine the auto insurance premiums you pay
The telematics device is fitted by insurers in your car. This device is capable of measuring the maximum and average speed travelled, acceleration and braking, distance travelled, elevation, number of journeys, road type, number of other cars on the road, weather circumstances and even cornering.
The telematics device captures all your driving data and passes this data to the insurers data warehouse. This data is cleaned and processed by the insurer, who can easily determine your risk profile and decide your motor insurance premium.
If the insurer fits a telematics device in your car, you will find your auto insurance premium, directly proportional to your driving performance and the usage of your car. If you are a careful driver who doesn't drive many kilometers or who drives in off-peak hours, you will see a fall/reduction in your auto insurance premium.
See also: What is covered under motor insurance?
The telematics device also has an e-call system, which helps emergency services locate your car in case of an accident, crash or a breakdown. A telematics device is very useful if your car is stolen. You can set a geographical boundary on the telematics device. You will receive instant alerts on your mobile, the moment the car crosses this boundary. If your car is stolen, you can use telematics data to make a claim.
In case of an accident, the insurer can easily assess the damage to the car and analysis of driving data can easily reduce fraudulent claims.
Some insurers have launched telematics services. This is a unique vehicle tracking system provided by the insurers to their customers. The insurers fit these devices in your car and they get real time data on your driving skills. The telematics device also helps you improve your driving by giving you constant alerts, which helps save fuel and cut down maintenance costs.
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Mr. C S Sudheer is the founder and CEO of IndianMoney.com – India’s largest Financial Education Company. He started his career with ICICI Prudential Life Insurance and later on worked with Howden India. After his brief stint in Howden India, he moved on and incorporated Suvision Holdings Pvt Ltd which is the sole promoter of IndianMoney.com. He aims to build a nation that is financially literate with investment savvy citizens.
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