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Two Ways You Can Save Money By Having An Insurance Telematic Device Installed

by Kayla Bates

Although auto insurance is something you must purchase if you own a vehicle, there's no reason why you have to pay an exorbitant amount for it. There are a number of ways you can reduce your auto insurance premiums, and one option is to sign up for a policy that uses a telematic device to track your driving habits. Here are two ways this can help decrease your insurance bill.

Pay for What You Use

Telematic devices are typically connected to usage-based insurance policies where you are charged based on how much you use your vehicle. Typically called either pay-per-mile or pay-as-you-drive policies, the insurance company uses the telematic device to clock the number of miles you put on your vehicle and base the cost of your monthly premium on that amount.

Insurance providers know that the less you drive, the lower the risk you'll get into an accident and file a claim against your policy. Thus, the lower your annual mileage, the bigger the discount you could receive on your premiums. For example, people who drive less than 5,000 miles per year could cut their auto insurance by as much as 50 percent.

Be aware that some usage plans will change your premium on a month-to-month basis, depending on the number of miles you drove the previous month, while others will base your premiums on the total number of miles you drive in a year. The best option for you depends on how you drive and whether your finances are flexible enough to accommodate payments that may fluctuate frequently. Thus, it's best to consider your lifestyle and choose the plan that fits your needs and preferences.

Improve Your Driving

Another way a telematic device can help you save money on your auto insurance is by forcing you to become a better driver. Some insurance plans will discount your premiums based on the way you operate your care. The device will make notes on how fast you drive, how frequently and how hard you hit the brakes, and even the times of day when you hit the road. These statistics are then plugged into a formula that determines your risk of getting into an accident and the insurance company charges you accordingly.

The device can make you aware of your driving habits which, in turn, can encourage you to make changes to them to decrease your insurance premiums. In addition to saving money, you'll avoid getting into an accident that may result in thousands of dollars in repair expenses and higher premiums.

For more information about insurance telematics devices or help selecting the right insurance product for you, contact an auto insurance company.