How telematics auto insurance can help you

This form of device-based insurance uses GPS to measure how much a car runs and the speed that it is run at.

• The general insurance sector is all set to get its first telematics offering for motor insurance. The sector will get a glimpse into pay-per-use format of insurance where driving patterns and distance covered will be the key focus to determine premiums. Bajaj Allianz General Insurance is launching the sector’s first telematics offering on Monday.
  
  
• Also called black-box insurance, this form of device-based insurance uses GPS to measure how much a car runs and the speed it runs at, among others. This is done with the help of an electronic application (on a smartphone) or a small device in-built into the vehicle.
  
  
• Based on data collected on the device or the app,  performance of the driver can be measured. Those who drive safer get a cheaper premium

Here is a look at the concept and how it works:

What is telematics auto insurance?

• Telematics auto insurance involves a black-box being fitted into cars
  
  
• These boxes are GPS-enabled and can track the vehicles
  
  
• Priced at Rs 1,800-Rs 2,000, these can be pre-installed or put in later
  
  
• Cost of these devices has fallen sharply in India
  
  
• Based on data collected on usage of car and information on average distance travelled and speed, an insurer offers discounts
  
  
• Those with lower risks associated with their vehicles can get lower premium
  
  
• In the west, young drivers are the most prolific users of these devices as they are otherwise required to pay more for insurance

Photograph: Atul Yadav/PTI