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Telematic use is accelerating, but it’s leaving many drivers wondering if they should hit the brakes. So we’re here to break it down, providing an overview of thia technology making its way into most cars if not now…then down the road.

Formula One teams have been using telematics for years to tell exactly where opponents are on the racetrack and insurance companies have been collecting millions of miles of data if not more. As drivers prepare turn the corner on this technology, here’s what you need to know.

WHAT IS IT?
Telematics is emerging and evolving automotive technology that monitors your vehicle and allows for vehicle information sharing.

  • Formula One teams have been using telematics for years to tell drivers where their opponents are on the racetracks.

HOW DOES IT WORK?
Telematics is a small device, generally the size of your hand, which is plugged into your car’s on-board diagnostic port. (located near your steering wheel and under your dashboard) It marries GPS with on-board diagnostics to record and report driving behaviors like:

  • Speed
  • Location
  • Mechanical and engine activity
  • When used with cellular networks, it can relay information between cars and a central management system.

Other uses:

  • Live weather
  • Traffic
  • Parking information
  • Apps
  • Driving directions
  • Social media
  • Tracking stolen cars
  • Trip and distance tracking
  • Teenage driver tracking
  • Fleet tracking for companies

TELEMATICS = INSURANCE = ???
Insurance companies are arguably the greatest stakeholder in telematics. They are able to use the automotive and driver data in a variety of ways, some already identified and others yet to be seen. Among them:  looking for a way to categorize a driver’s risk can use the data. (User Based Insurance or UBI)

  • Rate accuracy based on calculated risk
  • Personalized and specific rewards for ‘good’ drivers, higher premiums for ‘bad’ drivers
  • Determining fault or cause in accidents
  • Claims reporting
  • Theft prevention
  • Automotive Analysis

LOVE IT OR HATE IT?
While drivers have the potential to see a savings on insurance premiums, there is discussion as to whether the savings is worth sacrificing privacy. Additionally, analysts have raised questions as to whether the so-called black box or spyware could ultimately penalize drivers who don’t want the tracking. Still, advocates of telematics argue today’s society is already conditioned to embrace social media which can offer far more personal information than a telematics device.

How do you feel about telematics? We’d love to hear your thoughts and welcome you to weigh in with comments.