With rising income levels and massive development of intercity expressways, car ownerships are growing like never before. Consequently, the number of road accidents are rising, mainly due to a reluctance to follow safety measures while driving. Opting for comprehensive motor insurance policies has become the need of the hour. Until now, people driving rashly and paying little attention to road safety warnings were paying the same premium as those who drive safely and honour road-traffic rules. The good news is, drawing a distinction has become possible now - thanks to the advent of technology in the mechanical and telecommunication sector and product innovations in the insurance industry

The insurance companies providing motor insurance have been running pilot projects to see the acceptance to the concept of Pay As You Drive (PAYD), as well as its viability.

What is it?
Telematics insurance or black box insurance is a variation within motor insurance that allows you to pay a premium as per the quality of your driving and car usage.

 

How it works?
A device called black box is fitted into a vehicle and is linked to GPS. This lets the insurance track your car and analyse your driving behaviour. So the device will let your insurer know how many times you broke traffic rules, cut lanes, applied emergency brakes, and overused accelerator among others. The insurance companies will be able to store this data for their future use and based on your calibre, would assign you a score. Higher the score, higher will be the possibility of getting good discounts on motor insurance premiums.

Apart from availing of discounts on premiums, telematics devices can also help you improve the life of your vehicle as they will alert you on the performance of the vehicle and when there's the need to run a maintenance check. And that's not all. These devices will help immensely in case your vehicle meets with an accident. You can get medical aid and roadside assistance to tow your car faster. Let's not forget, tracking the stolen vehicle would become incredibly easy. The device manufacturers believe, modern black box devices will help insurance companies reduce costs associated with settling insurance claims. This is clearly a win-win situation for both, insurers as well as policy buyers.

Are there any negatives?
Views expressed by Vijay Kumar, CTO, motor insurance, Bajaj Allianz General Insurance Co., highlight the problem, "fourwheeler motor insurance policy is about Rs 3,000-Rs 4,000 on average -and the cost of a black box is also roughly the same. So it doesn't make sense in the Indian market, where premium rates are already competitive and loss ratios are at all time high. Smartphone-based telematics solutions would be more viable."

Should you take advantage of these technological advances?
Usage-based insurance appears to be the future of the car insurance segment. The experience of these products in western countries suggests that the usefulness of telematics insurance goes beyond savings costs on premiums and claim settlements. When a person is aware that his/her driving behaviour is being tracked, he/she becomes a more responsible driver. This results in overall improvement in road safety. Hopefully, with telematics insurance becoming more prominent in India, traffic discipline will improve.

What will make you buy the telematics motor insurance policies? Share your views here Facebook | Twitter

Stay connected with PersonalFN. Like us on Facebook , follow us on | Twitter

Add Comments

Comments
arachni_text Jan 06, 2019 arachni_text
arachni_text Jan 06, 2019 arachni_text
arachni_text Jan 06, 2019 arachni_text
arachni_text Jan 06, 2019 arachni_text
arachni_text Jan 06, 2019 arachni_text

 1 2 3