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Vehicle Telematics and Auto Insurance

Posted on December 3, 2011 at MobileMetering.com

As vehicle telematics continue to branch out into the business sector, more and more ways of saving on money are being discovered as a result of this system. Not only do vehicle telematics help in fuel consumption, small fleets cut back on their auto insurance expenses due to the use of this system.

Auto insurance takes a big chunk out of a fleet’s budget as roads are oftentimes riddled with accidents and mishaps. At times companies have invested so much into their vehicles, which carry company goods from one place to another that they cannot afford not to invest in insurance. Until recently, there was no way of cutting back on this expense.

About Telematics Auto Insurance

Though not all insurance agencies have this policy, several of them have incorporated the “safe driving insurance”. So how does it relate to vehicle telematics?

In short, this arrangement will involve the auto insurance company giving discounts to policies involving experienced and reliable drivers. By using the data taken from the telematics application, fleet companies can justify whether their drivers are reliable or not.

Auto insurance companies set up parameters that will define how “safe” a driver has to be in order to be an eligible candidate for this discount to be given. Most of them use a safety point system, the results of which are added and verified. Once it is proven to meet the standard safety rules, the company gets a discount on that particular policy.

The details will depend on the agreement between the two companies. Some insurance agencies increase the discount the longer the fleet stays safe. Thanks to the technology provided by vehicle telematics, this data can be easily submitted. It has to be understood that only this data is credible and accepted by the insurance companies – the discount will not work without telematics. So naturally, the first step in order to avail this discount is to install vehicle telematics into your fleet.

Some policies require the company to submit proof that they have continuous safety training programs for their drivers. This should be easily done as the telematics data should provide the specific violations of certain drivers, which include speeding, aggressive braking, excessive acceleration, lane changing, and other behavioral incidents that increase the risk of a vehicular mishap.

Insurance Savings from Telematics

One of the factors that bring down the costs of auto insurance is the accident rate. Since fleet companies have proof that their drivers are reliable and are not likely to be the cause of an accident, they may be eligible for a certain discount. The vehicle telematics will not only prove the safe driving skills of the driver, but also check on the running health of the vehicle. This only stresses on the fact that accidents will be unlikely to happen – unless outside factors cause it.

Fleet companies are also encouraged to keep improving their safety scores. It keeps their drivers and vehicles safe and at the same time increases the savings in their policies.

Auto insurance companies usually have partner telematics service providers, which are also most likely to have discounted rates to offer. It is a partnership that will create multiple levels of savings for any fleet company.

The savings will also go beyond the clause of the auto insurance of course. Safe driving means higher fuel efficiency and a well managed vehicle. Because of this, fleet companies save up on fuel consumption, vehicle maintenance and other fees involving traffic violations.