Published on January 5th, 2023 | by Sunit Nandi


Are Telematic Policies a Popular Insurance Choice?

Telematics, called pay-as-you-drive and usage-based insurance or UBI, is a vehicle policy that determines coverage based on factors such as car model, travel distance, and driving behavior. It’s increasingly becoming a popular choice among drivers, as it can result in lower costs, provided that you score highly when driving. These policies generally measure acceleration, speeding, mileage, braking, and the time when you drive. Beyond the score, it also provides tips to help you drive better, presenting you with the opportunity to improve your rates.


How does it work?

Insurance with telematics involves using a device to track a vehicle’s overall behavior. With these trackers, carriers can help determine driver behaviors that require improvement. It may appear minor until you realize it impacts the insurance policy’s price. And those who drive carefully and reduce their travel distances stand to receive premium discounts and pay much less than they otherwise would have. For this reason, telematics or UBI is becoming the preferred policy for many.

According to surveys, most drivers who had enrolled in telematics programs were generally satisfied with the choice. Over 60 percent had expressed their satisfaction with this type of insurance coverage and continue to use it, with only a little under 30 percent being neutral regarding the overall experience.

Different from other policies

One of the challenges that insurance companies face is that flexibility isn’t always a part of the policy. In most cases, the insured has little option but to settle for the available package. While usage-based pricing models aren’t new and have existed for quite some time, tactics like subscription programs don’t necessarily translate too well when it comes to insurance. This is because tracking one’s progress in the past wasn’t possible. As a result, this made it challenging to work out how to apply a usage-based pricing model. At best, consumers could only pick from a few available options.

It’s only via telematics that UBI has become a possibility, enabling insurers to determine the best prices for their vehicle insurance. And with the advantages it offers, the insurance type has been steadily growing in popularity.

A flexible approach to auto insurance

The primary reason for the growing popularity of telematics is that it gives the insured more control than they would have with traditional coverage. It provides drivers with opportunities to put themselves in a more favorable position while giving carriers the ability to determine the appropriate pricing of their products to attract more clients. In other words, this form of usage-based insurance offers unparalleled flexibility, irreversibly changing the direction of future policies.


In today’s increasingly technologically-driven age, there has never been a greater demand for flexible products. Whether it’s software, services, or products, businesses need to take their customers’ personal preferences into account to achieve any measure of success, and insurance products are no exception. Telematics is the first step for insurers to accommodate these needs, and there’s little doubt that UBI will eventually become the norm.

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I'm the leader of Techno FAQ. Also an engineering college student with immense interest in science and technology. Other interests include literature, coin collecting, gardening and photography. Always wish to live life like there's no tomorrow.

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