Telematics is a new method introduced by some insurance companies to charge premiums to customers based on driving behavior information collected by the device attached to cars. This new method breaks with the usual way of pricing the insurance policy, which involves insurers collecting statistical data and preparing it to check which people fall into which categories. They are then charged premiums accordingly. However, with the usual pricing strategy, there is an adverse selection problem (a market failure where bad products are more likely to be selected due to lack of information for the buyer or seller), where the The insurer does not fully understand the risk. that the customer faces. Telematics can help combat the adverse selection problem depending on how open consumers are to this policy, and implementing such a policy can be more effective than typical insurance pricing policies . Insurance companies make profits by charging premiums to customers. These companies must pay customers when claims are made, and insurance companies benefit if they pay less than what they state in the policy. Customers purchasing insurance often have private information about the level of risk they face, which they do not fully share with insurers in order to avoid high premiums. This unavailability of private information leads insurers to bear additional risks for which policyholders do not pay. Thus, in order to decipher the behavior of drivers to understand the risk, insurers collect information concerning age, gender, marital status, driving record, etc. However, this method is not effective. The benefits of such a policy are not exactly related to "actual intensity or risk...... middle of paper ...... general trend towards the use of UBI policies, in the future , many people and governments could sign up to it. Telematics, leaving aggressive drivers no choice, thus eliminating the problem of adverse selection. Thus, telematics can prove to be the solution to the adverse selection problem and will help in setting effective insurance premiums that best suit customers. The insurance market failure that has existed for so long could finally be corrected with this policy. Insurers can be more confident about risk by calculating with telematics and charging the right premiums. As assessed above, this policy could solve adverse selection problems and would help society in general with fewer accidents, traffic and CO2. So, I believe that with the growing popularity and benefits it has shown, telematics is a better policy than usual insurance policies..