Telematics is a new method introduced by some insurance companies to charge customers premiums based on driving behavior information collected by the device connected to the cars. This new method breaks the usual way of pricing insurance policy which requires insurers to collect statistical data and prepare it to check which people fall into which categories. Premiums are then charged accordingly. However, with the usual pricing strategy, an adverse selection problem (a market failure in which poor products are more likely to be selected due to poor information for both buyer and seller) occurred, in where the insurer does not fully know the risk the customer is facing. Telematics can help against the adverse selection problem depending on how consumers open up to this policy, and the implementation of such a policy can be more effective than usual 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 is stated in the policy. Customers purchasing insurance often have private information about the extent of risk they face that they do not fully share with insurers to avoid high premium commissions. This unavailability of private information leads insurers to bear additional risks for which policyholders do not pay. Therefore, to decipher drivers' behaviors and assess risk, insurers collect information related to age, gender, marital status, driving history, etc. However, this method is not efficient. The rewards of such a policy are not exactly related to the “actual intensity or risk… middle of the paper… the general trend is moving towards the use of UBI policies, in the future, many people and governments may join Telematics leaves no choice to aggressive drivers, thus eliminating the problem of adverse selection. Therefore, telematics may prove to be the solution to the problem of adverse selection and will help establish effective insurance premiums that best suit customers. The insurance market failure that has existed for so long can finally be corrected with this policy. Insurers can be more certain of the risk by calculating them electronically and charging the right premiums. As assessed above, this policy could solve the problems of adverse selection and will help society in general with less accidents, traffic and CO2. Therefore, I believe that with its growing popularity and the benefits it has demonstrated, telematics is a better policy than usual insurance policies..