Updated: 29 February 2024

What Does Telematics Mean?

Telematics is a field of technology concerned with devices placed in a vehicle that use wireless technology to monitor its conditions, including its location and the speed at which it is driving. The term is coined by combining “telecommunications” and “informatics.”

Telematics is now being used by some insurance companies to provide usage-based auto insurance.

Insuranceopedia Explains Telematics

Telematics involves placing a black box at the back of a car or the area of the vehicle most safe from a crash. The box monitors the activities of the car and the information is sent wirelessly and stored. The device can detect whether the car is idle, moving, or even when it is involved in an accident.

Companies that have a fleet of vehicles can benefit from using this technology to monitor operations.

Insurance companies are also using the technology to provide auto insurance that is priced according to the behavior of individual drivers, rather than offering a premium based on the driver’s risk class or even driving history.

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