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How does telematics work in my car? How can it help lower my insurance premium?

Telematics is the transferring of information through your cell signal or Wi-Fi connection. Auto telematics is a method of sharing information like GPS and diagnostics recorded by your vehicle with a third party, such as an insurance company or mechanic.

Image of a person in a vehicle, one hand on the steering wheel and one interacting with an onboard telematics system.

Auto telematics is the use of communications and information technology to transmit driving and vehicle information. This information can be sent to your insurance company and even used to provide you a discount.

What is auto telematics?

Auto telematics is a method of monitoring a vehicle. Through a combination of cellular, GPS and on-board diagnostics, telematics can gather and transmit data about the vehicle like:

  • The vehicle’s exact location. This data can be communicated with police and other emergency responders in the event of a crash, or a tow truck driver if you’re in an unfamiliar location.
  • The distance the vehicle has traveled. Along with other information like speed, braking or turning, the distance a vehicle travels could be used by your insurance company to help determine if you qualify for discounts on your insurance policy.
  • How the vehicle is performing. A mechanic or technician can review the information to possibly help identity an issue with the vehicle more efficiently.

Why should I consider allowing access to my vehicle's telematics?

It’s important to remember that auto telematics communication goes both ways, so data can also be received, which adds to its benefits:

  • Assistance. If you have an emergency, need directions or just want to make reservations at a nearby restaurant, telematics systems connect you to the appropriate live support. Sometimes in the case of a crash, the vehicle automatically notifies a monitoring service who dispatches emergency vehicles immediately.
  • Convenience. Many systems offer access to email, weather, traffic reports, stock quotes and even social media. 
  • Safety. Newer telematics systems can locate or track a car with GPS - whether it's stolen or you just can't remember where you parked. Some systems can also monitor your vehicle's diagnostics, automatically detect collisions, and remotely lock and unlock doors as well as allow you to start your car remotely with your smart phone.
  • Discounts. Insurance companies can use telematics information to reward your driving. For example, State Farm® Drive Safe & Save™ helps you control how much you save on your insurance premiums. Drive Safe & Save uses your smartphone, combined with a provided Bluetooth beacon, to collect basic information about your driving characteristics. The less you drive and the safer you drive, the more you could save on your auto insurance.
  • Preventive maintenance. Your vehicle’s telematics information can provide you with the current “health” or condition of your car. This information helps avoid breakdowns by allowing preventive maintenance by service technicians.

What auto telematics system is right for me?

You can choose from several features for an auto telematics system from mulitiple providers. To help determine which is right for you, ask yourself what you'll benefit from the most. Keep in mind: Some systems come pre-installed and are activated at no charge after a new vehicle purchase, but a monthly or annual subscription charge may apply beyond the trial period. Other systems can be added with little or no installation. For example:

  • If safety is your concern and you have a car equipped with OnStar™, you can activate the system for a monthly service fee. Once activated, you will have access to all the benefits of OnStar.
  • If saving on your car insurance premium is a priority, check with your insurance company to see if they have an auto telematics program and what equipment might be needed. Drive Safe and Save from State Farm uses a mobile app and a small device that sits on your dashboard. No equipment is needed to be installed in your car. The device uses your cell phone to transmit the needed telematics.
  • If understanding the condition of your vehicle is your concern, check with your mechanic or dealership to see what they would recommend.

The information in this article was obtained from various sources not associated with State Farm®. While we believe it to be reliable and accurate, we do not warrant the accuracy or reliability of the information. These suggestions are not a complete list of every loss control measure. The information is not intended to replace manuals or instructions provided by the manufacturer or the advice of a qualified professional. Nor is it intended to effect coverage under our policy. State Farm makes no guarantees of results from use of this information.


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