This New Car Insurance Program Is Saving Drivers 22% on Average -- and Making Roads Safer
Can telematics benefit you -- and other drivers on the road?
- Many insurers are now offering the chance for drivers to reduce premiums through the use of telematics.
- Telematics monitors driving behavior so motorists can pay lower premiums if they don't drive often or if they have safe driving habits.
- A recent Nationwide survey revealed many motorists are willing to embrace telematics in order to reduce premiums.
Bad driving habits can increase the chances of an accident and lead to higher auto insurance premiums. Insurance companies are on a mission to try to root out these bad habits, encourage safer behaviors, and more accurately price policies based on whether their customers are responsible behind the wheel.
Telematics is the approach many insurers are taking. Telematics involves the use of GPS technology and onboard diagnostics to monitor motorists' behavior. Those who drive safely are rewarded with lower premiums.
Nationwide is one of the insurers harnessing the power of this technology. And a recent study the insurer conducted showed more customers are open to utilizing it. Not only that, but it's benefiting both drivers who embrace it and other motorists on the road.
Consumers are becoming open to telematics
According to Nationwide, close to half of all consumers have indicated they'd be interested in participating in a telematics program. This includes:
- 46% of customers who said they'd participate in an auto insurance program in which they'd pay per mile. This type of program would benefit infrequent drivers who are less likely to get into collisions because they don't spend as much time on the road.
- 45% of customers who said they'd be interested in a program that tracks their habits and rewards them with discounts for safe driving.
Motorists have increasingly become more accepting of the monitoring technologies that would be necessary to operate these programs. In fact, 45% of people responding to Nationwide's survey said they'd be OK with a device that collects data on their driving habits and behavior, compared to only 36% who said they had no problem with streaming services tailoring ads to them based on viewing habits.
Why are motorists so open to telematics?
Drivers may be more accepting of telematics technology than other types of monitoring because telematics can result in substantial savings off their insurance costs.
“Telematics gives the customer more control of their price by factoring individual driving behaviors into their premium," according to Sarah Jacobs, VP of personal lines product development at Nationwide. "In fact, our average telematics customer saves 22% compared to our traditional programs!"
The cost of insurance is a major concern for many people, with 73% of consumers responding to a 2020 survey indicating that increasing auto insurance costs are a source of worry. Many motorists unhappy with the cost of auto coverage believe they shouldn't have to pay as much as their peers because they think they are personally safer behind the wheel. In fact, a whopping 66% of people believe their costs should be lower due to their good driving habits.
Telematics is ideal for these customers, as the technology gives them an opportunity to demonstrate their skills and be rewarded for it. And, some evidence suggests that motorists embracing this new technology could actually end up helping everyone.
LEARN MORE: Nationwide Auto Insurance Review: Lots of Rewards for Safe Drivers
"By rewarding safer driving with lower premiums, and providing the opportunity for ongoing driving feedback through our app, we also hope to influence a safer driving environment on the roads," Jacobs said. "We saw this with our distracted driving telematics program, which led to a 9% decrease in distracted driving over the first six months.”
How to decide whether telematics makes sense
Motorists looking for an opportunity to save on insurance should learn about the telematics programs their auto insurers provide.
If they're comfortable with giving up some privacy and feel confident their driving habits will result in a reduction in their insurance costs, they have little to lose by signing up.
Our best car insurance companies for 2022
Ready to shop for car insurance? Whether you’re focused on price, claims handling, or customer service, we've researched insurers nationwide to provide our best-in-class picks for car insurance coverage. Read our free expert review today to get started.
Our Research Expert
We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.