Car insurance firm RAC has launched a new telematics device that can remotely diagnose vehicle faults before they result in a breakdown.

The RAC Advance early warning system is the size of a matchbox, and plugs into the car's diagnostic port, allowing it to monitor imminent battery failure, battery drain, alternator problems, brake wear or diesel particulate filters becoming clogged.

It also picks up on any issues normally detected by the engine management system such as low oil or emission levels, or problems with the throttle.

This information, together with the car's location, is then transmitted back to the RAC over a 3G mobile connection, enabling the RAC response team to alert the driver of a potential problem via email, text or phone, and suggest a repair.

This sort of diagnostics and fault reporting has previously only beeen available on commercial vehicles and on very high-end cars.

RAC Advance will also act as an instant alert to the rescue service in the event of a serious accident, and provide an accident recorder for the motorist when handling a potential insurance claim.

“We know that some breakdowns can be avoided with a pre-emptive warning and intervention so this will significantly advance how we are able to deal with an actual breakdown or accident, reassuring our members that they are in safe hands,” said RAC technical director David Bizley.

“With an accurate fault diagnosis and vehicle location, our patrols will be able to reach members more quickly, prepared with appropriate replacement parts.”

The device, which will be available to all existing and new RAC members during 2013, will also help customers to monitor their own driving efficiency and achieve better fuel economy. Research shows that most drivers can save up to 15 percent on their annual fuel bill by adopting ‘greener’ driving behaviours, according to RAC.

This means driving more efficiently, accelerating and braking less sharply and using the vehicles own momentum to best advantage. RAC said efficient drivers could potentially be rewarded with discounts on their car insurance premium.

“Based on the typical average annual fuel bill motorists could save up to £350 a year. On top of this is the potential to save up to £300 by sharing their responsible driving behaviour via RAC Advance on their RAC Car Insurance,” said Bizley.

The use of in-car telematics systems is now one of the most popular uses on machine-to-machine (M2M) communications, allowing companies to remotely to detect faults that can currently only be diagnosed at a workshop or by someone with expensive diagnostic equipment.

At Mobile World Congress, Hughes Telematics showed off an M2M telematics platform based on Oracle's Unified Customer Relationship Management (CRM) and Billing and Revenue Management (BRM) solution.

US insurance firm State Farm uses the platform to offer usage-based insurance packages based on actual driving habits, and also to provide stolen vehicle location assistance, driving reports and a mobile personal emergency response system.

Last year, satnav manufacturer TomTom also joined forces with insurance broker Motaquote to launch a new car insurance product that rewards safe drivers with lower costs. Driving habits are monitored using a Link tracking unit and displayed on the driver's dashboard and in regular emails.