Smart phones are making their way into every corner of business and industry. With their ease of use, instant communication and information, and proliferation of apps have made them a necessity for many.

Smart phones also enable technological advances that company’s can use to grow their business. And this has not been lost on the insurance companies. Motorists can now forward their driving information to the insurance provider via their phone app, and this can result in a lowering of coverage premiums.

In an effort to promote discounted rates for safe drivers, insurance companies are cashing in on the opportunities the mobile phone offers for accurate data transference. Synchronized with the advanced monitoring technology installed in newer vehicle models, apps can upload everything about a car’s performance directly to the insurance company resulting in more accurate information and rate savings.

How This System Works

Most of the newer car models have very sophisticated onboard computing equipment that is designed to alert the driver to adverse conditions and apply changes to the way the vehicle responds. This data can easily be uploaded and stored as part of a vehicle performance record. The data also shows how much pressure is being applied to the brakes, the real-time speed of the car, and how many miles are being driven per week or month.

Of great importance to the insurance company is the driver behavior aspect. The data can be used to determine whether the driver is performing acceptable maneuvers that would classify him or her has a responsible motorist. T he smart phone can actually be linked directly to the vehicle’s onboard diagnostics and forward this information to the provider’s data storage system.

Gathering the Data

Until recently, insurance providers gathered statistics about certain car makes and models, accident frequency in a given neighborhood, and the likelihood that a car would be stolen from a particular location. This information would be mixed together with the driver’s history of accidents, his or her age, and the type of car being used. The result was a calculated insurance premium.

Many states and local jurisdictions are now charging user taxes and fees based on the usage of certain roadways and bridges. The insurance companies are now getting in on the act and offering discounts for drivers who drive less each month and avoid hazardous situations. Rather than relying on past performances noted in police reports, the insurance provider can go to a more direct source, which is the car itself.

Different Types Of Programs

Some insurance companies are offering their customers a device that is installed on the vehicle and generates a monthly report concerning driving habits. The idea is that insurance rates may be lowered when the policy is up for renewal. Other insurance companies are offering this type of service to new policyholders, without a six month or annual coverage requirement before enlisting in the program.

Smart phones can be used to link directly to the computer system on the vehicle, however. The app is used to connect with the car’s operating diagnostics system and record the information. For example, State Farm has a program called Sync, developed in partnership with Ford Motors.

The information is sent from the vehicle directly to the insurance companies data storage system. This means that the insurance company is tracking the car’s performance continuously.

Is Big Brother Watching?

It is understandable that many consumers would have concerns about privacy as well as the fear that insurance rates could be hiked overnight simply because of a hard braking maneuver at a stop light. It is fascinating to consider the implications of this new technology. It may not be too long before all insurance is calculated on a monthly use basis, much like electricity usage is metered and billed every 30 days.

Insurance is not an industry as boring as it used to be. Insurance companies are using technology to transform how they interact with and rate customers. It will be interesting to see if consumers win in the long run with this trade off.

This article was contributed by www.discountcarinsurancequotes.net helping drivers learn about the latest discounts and obtain lower auto insurance rates.