Encourage Safer, Smarter and Greener Driving Behavior
What is Connected Car Insurance?
Connected car insurance (also known as connected auto insurance) is a tech-driven auto insurance leveraging the telematics data (Internet of Things: IoT).
Behavior-based connected auto insurance programs offer discounted insurance to policyholders who agree to share their driving data with their insurer. These discounts may come in the form of a signing-up bonus, lower renewal premiums, or other rewards for safe driving.
By encouraging safer driving habits and patterns, these programs aim to reduce the risk of accidents, contributing in making roads safer for everyone. All while helping policyholders save on their monthly premiums, based on their own driving behavior.
How does Connected Car Insurance work?
Today, many insurance carriers offer connected car insurance through various data collection methods. Most commonly, drivers use a smartphone app that tracks driving behavior in real time. Others may use a Bluetooth-enabled self-install device mounted on the windshield, or a plug-in OBD-II device that connects to the vehicle’s diagnostic port. In some cases, vehicles come equipped with OEM connected systems (like GM’s OnStar).
All of these tools help assess driving habits and risk levels, enabling insurers to determine eligibility for discounts and rewards.
Which driving elements are tracked and analyzed through Connected Car Insurance?
Connected auto insurance offers accurate insight into driving behaviors, and allows insurers to determine insurance rates on actual risk versus perceived risk.
The technology allows for insurers to monitor how much, where and when a policyholder drives, which enables them to gain valuable insights. Analyzing the data can contribute to the development of further connected insurance solutions and improved policyholder experience.
Here are some of the data being collected to help insurers assess driving risk:
- Acceleration and harsh Braking – harsh acceleration or braking applies more force than what is normally required to the vehicle’s brake or accelerator
- Harsh Cornering – applying excessive force when manoeuvring corners while driving
- Speed – the act of exceeding speed limits higher than what is legal and safe
- Distracted Driving – this represents the phone usage while usage, whether it’s on a call or actively using the screen – Learn more about Distracted Driving
- Time of day driven – policyholders who do most their driving at night are considered higher-risk drivers, since night trips are prone to more accidents
- Distance driven and number of trips driven in a day
What are the benefits of behavior-based Connected Car Insurance?
Connected car insurance programs offer more than just discounts—they create a dynamic feedback loop between insurers and policyholders. For insurers, access to real-time driving data allows for more accurate risk assessment and personalized pricing based on each driver’s behavior.
This data-driven approach not only improves underwriting decisions but also opens up new communication touchpoints, fostering stronger relationships and trust with policyholders. Insurers can reward safe driving and proactively coach users when risky behaviors are detected, helping reduce accident risk over time.
For policyholders, the benefits of connected car insurance go beyond cost-savings, they can:
- gain insights into their driving habits
- receive personalized coaching and reminders,
- improve their behavior to unlock additional rewards.
Connected car insurance is a win-win model that promotes safer roads while making insurance more transparent and rewarding.
