Telematics is an integration of telecommunications and information and communication technology. It involves the wireless transfer of computerized information over long distances. For example, auto insurers have been using telematics to gather essential data from their clients' cars; data they use to gauge drivers' behaviors. Now the technology is creeping into the home insurance industry.
How It Works
In the home insurance sub-industry, telematics can help insurers to collect data from smart home products. Insurers can then use the data to gauge the threats faced by different homes. Smart products, such as controllable thermostats and carbon dioxide monitors, provide crucial information that insurers can use to gauge how much your house is prepared for a fire outbreak.
For example, the data can tell if you frequently deal with small fires (for example if there are occasional spikes in temperature and carbon dioxide levels in your house). This tells your insurer that you aren't too careful with fire prevention measures, and it's only a matter of time before you suffer an outbreak. This information is useful when calculating premiums when your policy comes up for renewal.
Telematics can also help insurers avoid losses when you install smart devices you can control remotely. For example, turning on the heater when the temperature falls may prevent pipes from bursting and causing serious water damage.
Benefits to Homeowners
On the surface, it may look like home telematics only benefits insurers, but this isn't true. Insurance carriers can use the information to offer discounts to homeowners whose collected data show safe homes. Consider a case where you have an automated door lock, and the collected data shows that it is always in use. Your insurer may give you a discount because your house is more difficult to break into compared to another house that doesn't have or use the lock.
Apart from that, you can also use the information to analyze your home security. Such an analysis may help you to identify areas of improvement. For example, if the data shows there is too much moisture in your house, you can hire a plumber to identify and plug the leaks to preempt water damage. That's a win-win situation for both you and the insurer.
The Issue of Privacy
23 November 2015