How IoT Will Change Auto Insurance

To determine policy premiums, auto insurers have traditionally used factors such as driving record, vehicle usage and insurance history. This is in addition to outside variables like customer location (collision/theft rates in the area), age and gender (teen males tend to have higher rates), and non-driving elements like credit score. Recently, however, some insurance companies have begun to harness the internet of things to monitor real-time driving habits. By employing telematics devices, which plug in to the vehicle’s on-board diagnostic port, insurers are provided with analytics about a policyholder’s specific behind-the-wheel behaviors. So, instead of paying for collision coverage even when the vehicle is parked in the garage, customers would only pay for it when the car’s being driven.