Telematics, or the concept of gathering data on your driving habits and transmitting them to your insurance company is no longer just an idea that may happen someday.  This new technology is gaining acceptance and traction and as such promises to have impacts on our society far beyond just insurance rates.  Telematics may just save your life one day.

Telematics for car insurance, also known as pay as you drive, or usage-based insurance rating has been something that the insurance industry has been eyeing for a long time.  Originally the hope was that the insurance companies could determine how many miles a year that you drive and use this information to provide you with a car insurance rate that more accurately reflects your driving risks.  But with the development of technology, telematics will go far beyond that original goal. 

Telematics and car insurance have had several hurdles to jump over the years.  The biggest of these are cost, data management, and privacy.  In the early years, the cost to install a device in the vehicle that could transmit data to the insurance company only really made sense at the corporate fleet level.  But over time the costs have come down and the devices are now very affordable in a one car installation situation.  Data management was a problem until recently.  With the expansion of smart phones, more and more bandwidth has been created which allows the flow of the huge amount of data that any car will collect on its driver.  Privacy is still the last hoop to jump through, but that problem may be fading.  This is because today’s youth seem to not have a great a concern or desire to protect their privacy.  This is already evident in the number of phone apps that track your location and post them publicly to others.

Telematics can allow the insurance company to adjust your car insurance rate based on your driving habits.  The data collected is now so rich that they can track how fast you accelerate, how fast you drive, how hard you brake or take corners.   All of this data can much more accurately predict your likelihood of causing an accident than can your credit score or the number of speeding tickets that you have been issued. 

Trucking companies that have installed telematics in their fleets, almost universally report that accident rates go down right away.  It seems that once drivers know that everything they do and everywhere that they go is being measured and monitored, suddenly they become safer drivers.  Can this effect be extrapolated out  for the population as a whole if everyone were to have a telematics device in their car?  We don’t know for sure but there seems to be evidence that this may be true.

Of course telematics won’t benefit everyone.  If the car insurance world has inadequate information on which to base their rates today, then that means that some people are subsidizing others.  If the insurance company doesn’t know for sure if you are a safe driver or a risky one, then you can be sure that the safe drivers are subsidizing the riskier ones.  Knowing this, you know that telematics will mean that as some drivers save money as a reward for their safe driving habits, then other drivers, or those that refuse to use telematics will have to pay more to make up the difference.  This is why I believe that eventually telematics will be ubiquitous in the insurance world and in fact, cars may soon come equipped with the telematics devices as a standard part of the vehicle.  It will one day just be too expensive to purchase a car insurance policy that is not based on telematics.  The insurance company will feel like the old fashioned rating system blinds them from seeing the bad risks and as such will charge a much higher rate for those policies.  Eventually no one will be able to afford a policy not based on telematics.

If telematics do change our behavior behind the wheel and force us to drive as though our insurance agent were in the back seat watching us, then I think that this technology will be a game changer.  Just how long it will take for this technology to be the standard way car insurance rates are calculated remains unknown.  But don’t be surprised if it all happens faster than you thought it would.  Just watch a TV show or a movie from before 2006 or so and see how strange it seems that no one has a smartphone.  Telematics could make this jump into ubiquity just as quickly.

While none of our insurance companies is currently offering rates based on telematics, that probably has more to do with the way NC auto insurance is regulated.  I look for this to change in the very near future.  If you would like any help with your home or auto insurance, I hope you will call Clinard Insurance Group, toll free, at 877-687-7557.

Let’s face it, almost no layman purchasing a homeowners insurance policy takes the time to read the policy language.  And even those that do may have some trouble interpreting what is covered and what is not.  In this blog I’d like to tackle a common question and point out an area where no policy provides protection, yet could result in an expensive bill for you: fallen trees.

Large trees in the yard can pose several risks to homeowners.  The most obvious one is the damage that a tree could do to your home or your outbuildings or fences, or even you decks, patios or driveways.  Once you get past the risk of injury from a falling tree, where does the NC homeowner stand regarding insurance protection?  Now policy forms vary from state to state and from company to company so I suggest that you consult your own policy for exact and specific coverage.  This blog will try to answer these questions in a general way that should be accurate for the majority of NC homeowners with a North Carolina Homeowners Insurance Policy.

With the disclaimers behind us, let’s move on.  The damages to your home or your structures caused by a wind blown, fallen tree will be covered, subject to your deductible.  In addition, the standard HO-3 homeowners form provides up to $1000 for the cost to remove the tree from your premises.  This applies if your tree was felled by wind, hail, or weight of ice, sleet or snow. But here is where it gets tricky.  If that tree does not damage your home, outbuildings, or fences, then no removal coverage will apply.  There is an exception though.  If the fallen tree is blocking your driveway, then you will have up to $1000 coverage to clear it from your driveway.

But what is missing in this wording?  Well, while $1000 seems like plenty for removing a fallen tree, if you have large trees, or if several come down at one time, then$1000 may come nowhere near the amount you will have to spend to remove the debris from your yard.  I have seen cases where a tree fell in a difficult place and while it didn’t hit any structures, it required a crane to remove it.  Those costs can run up into the $10,000 range in a big hurry.  I’ve also seen cases where one tree falling brought down a couple more trees with it, generating cleanup costs well beyond the $1000 mark.  So if you have large trees around your home, you might have a rather large loss exposure that simply won’t and can’t be covered by an insurance policy.  I think that knowing that in advance might be helpful to some homeowners.

Those of you who are particularly perceptive may have noticed that lightning was not mentioned in the list of covered perils that can trigger the removal coverage?  Well the NC standard homeowners policy has direct coverage for trees, shrubs and other plants that are damaged by lightning.  The policy is designed to pay up to 5% of the coverage limit on your dwelling for lightning damage to trees, shrubs, plants or lawns.  But, no more than $500 will be paid for any one tree, shrub or plant.  But here’s the good news, if that tree is hit by lightning, it is now considered covered property and is eligible for removal coverage as well.  So if that huge tree in your yard falls and hits nothing on the way down, you might find yourself hoping for some evidence that it was hit by lightning.  Otherwise, you are going to be writing some big checks to tree removal service companies.

Here at Clinard Insurance Group, located in lovely Winston Salem, NC, we want all insurance buyers to be informed consumers.  If you need any help with your home or auto insurance, we hope you will call us, toll free, at 877-687-7557.