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Telematics Car Insurance: How Usage Based Auto Insurance Works
Reviewed by the AtozInsuranceusa editorial team.
Telematics car insurance uses driving data to help an insurer calculate part of your auto insurance price. Insurers often call this usage based insurance, or UBI. The technology may collect data through a smartphone app, a device connected to your vehicle, or technology already built into the car.
The National Association of Insurance Commissioners explains that telematics programs can measure factors such as mileage, time of day, location, rapid acceleration, hard braking, hard cornering, and other driving information. An insurer can combine this information with its normal rating factors when calculating your premium.
Telematics insurance can benefit drivers whose driving patterns match the insurer’s lower risk criteria. A driver who travels fewer miles, avoids sudden braking, limits risky phone use, and drives at times the insurer considers safer may qualify for a better rate with some programs.
Savings are not guaranteed.
Some telematics programs can increase your rate when the recorded driving indicates greater risk. Other programs mainly affect the size of your discount. Rules differ by insurance company and state. Progressive, Allstate, and GEICO currently explain that riskier driving can affect rates under certain telematics programs and in certain states.
Before enrolling, compare what the insurer tracks, how long monitoring lasts, whether your rate can increase, how your information is used, and whether the program is available in your state.
What Is Telematics Car Insurance?
Telematics car insurance is auto insurance that uses technology to collect information about how, when, and sometimes where you drive.
The insurance industry generally calls this usage based insurance.
Instead of pricing a policy only with traditional factors such as location, vehicle, driving record, age, mileage estimates, and coverage selections, a telematics program adds information from your actual driving.
The NAIC identifies several forms of usage based insurance, including:
- Pay as you drive
- Pay how you drive
- Pay as you go
- Distance based insurance
These models can use driving data in different ways.
Telematics does not mean that every insurer uses the same formula. One company may place more weight on braking and acceleration. Another may focus heavily on mileage, nighttime driving, or phone activity.
Always review the specific program before enrolling.
How Does Telematics Car Insurance Work?
Most telematics programs follow a simple process.
1. You Enroll in the Program
You first buy or maintain an eligible auto insurance policy and choose the insurer’s telematics option.
Enrollment may be optional. Program availability can depend on the insurer, state, vehicle, driver, and policy.
2. The Insurer Collects Driving Data
The insurer may collect information through:
- A smartphone app
- A device connected to the vehicle
- Technology built into a connected car
The NAIC says usage based insurance can rely on mobile apps, connected vehicle technology, onboard diagnostic devices, and other communication systems.
3. Your Driving Creates a Score or Rating Result
The program may review factors such as:
- Miles driven
- Braking
- Acceleration
- Speed
- Cornering
- Time of day
- Phone activity
- Trip frequency
- Location
- Length of trips
The exact factors differ among insurers.
4. The Insurer Uses the Result
Some programs apply the driving result at renewal.
Others provide an enrollment discount first and adjust the discount later after collecting enough data.
Some insurers may increase rates for higher risk driving. Other programs may simply provide a smaller discount or no driving based discount.
What Driving Data Can Telematics Insurance Track?
Not every program collects every type of information.
The NAIC and Washington State Office of the Insurance Commissioner identify several common data points that usage based insurance programs may monitor.
Driving data | What it may show |
Mileage | How much you drive |
Time of day | Whether you often drive during periods the insurer considers higher risk |
Braking | How often you brake suddenly |
Acceleration | How often you accelerate rapidly |
Speed | How fast you drive |
Cornering | Whether you regularly take turns sharply |
Phone activity | Whether the program detects phone use during trips |
Location | Where the vehicle travels when the program collects GPS data |
Trip length | How long individual trips last |
Trip frequency | How often the vehicle is driven |
Ask the insurer exactly what it collects.
Do not assume one insurer’s telematics rules apply to another company.
Can Telematics Car Insurance Lower Your Rate?
Yes, telematics car insurance may lower your premium if your driving fits the insurer’s rating criteria, but savings are not guaranteed.
Drivers who travel fewer miles or show driving patterns an insurer associates with lower claim risk may qualify for a discount or lower usage based rate.
For example, State Farm says its Drive Safe & Save program updates its discount based on mileage and driving characteristics. Nationwide says SmartRide can reward customers based on driving behavior.
Your final price still depends on other rating factors allowed in your state.
Telematics does not erase your vehicle type, location, coverage limits, driving history, policy changes, or other factors used by the insurer.
Can Telematics Insurance Make Your Rate Go Up?
Yes, some telematics programs can increase a driver’s premium.
The Washington State Office of the Insurance Commissioner tells consumers that usage based premiums may move up or down based on driving behavior.
Progressive states that unsafe driving recorded through a telematics program can result in no discount or a higher rate.
Allstate says drivers who regularly show higher risk behaviors through Drivewise could see rates increase in states where the program allows it.
GEICO also states that riskier DriveEasy participants may see higher rates depending on the state.
This makes one question essential before enrollment:
Can this program increase my premium, or can it only reduce my discount?
Get a clear answer for your state and policy.
How Much Does Telematics Car Insurance Cost?
There is no single national price for telematics car insurance.
Telematics usually affects the price of an existing or new auto insurance policy rather than creating one fixed telematics insurance price.
Your premium can depend on factors such as:
Rating factor | Possible effect |
Driving record | Accidents and violations can affect your base premium |
Vehicle | Value, repair costs, use, and other vehicle characteristics can affect price |
Location | Insurance prices and legal requirements differ by state and area |
Coverage | Higher limits and added vehicle protection usually affect price |
Mileage | Some telematics programs reward lower mileage |
Driving behavior | Braking, acceleration, speed, phone use, and other behaviors may affect results |
Time of driving | Some programs consider when you drive |
Policy drivers | Other drivers listed on the policy may affect pricing |
State rules | State insurance laws affect rating practices and program availability |
The NAIC explains that telematics allows insurers to combine actual driving behavior with other factors used to price auto insurance.
Compare the final premium rather than the advertised discount percentage alone.
A policy offering a larger telematics discount does not automatically produce the lowest total premium.
Examples of Telematics Insurance Programs
Several major U.S. auto insurers currently offer telematics programs.
Program rules, availability, discounts, rate effects, and eligibility can change by state.
Insurer | Program | Examples of data or rating approach | Can driving affect price? |
Progressive | Snapshot | Driving habits, mileage, and driving times | Yes, higher risk driving can increase rates in some cases |
State Farm | Drive Safe & Save | Mileage and driving characteristics | Discount can change based on collected information |
Allstate | Drivewise | Speeding, braking, phone activity, late night driving, and other behavior | Yes, rates can increase for riskier driving in some states |
GEICO | DriveEasy | Braking, mileage, phone activity, and driving score | Yes, riskier drivers may pay more depending on state |
Nationwide | SmartRide | Driving behavior and mileage | Mainly structured around earning a driving based discount, subject to state rules |
These programs should not be compared only by the maximum advertised discount.
Progressive explains that Snapshot can produce a higher rate for drivers whose recorded behavior shows greater risk.
State Farm says Drive Safe & Save can provide a discount based on mileage and basic driving characteristics.
Allstate states that Drivewise reviews driving behavior and can raise rates for riskier behavior in states where its rules allow that result.
GEICO says DriveEasy calculates a driving score and uses that score in insurance pricing, with riskier drivers potentially paying more depending on their state.
Nationwide says SmartRide rewards safer driving and generally focuses on a driving based discount rather than a surcharge, although program details vary by state.
Telematics Insurance Versus Traditional Car Insurance
Traditional auto insurance and telematics insurance can provide the same basic types of auto coverage.
The main difference involves pricing.
Feature | Traditional insurance | Telematics insurance |
Driving record | Common rating factor | Common rating factor |
Vehicle | Common rating factor | Common rating factor |
Location | Common rating factor | Common rating factor |
Coverage selections | Affect premium | Affect premium |
Actual mileage | May use an estimate | May collect actual mileage |
Braking behavior | Usually not directly monitored | May be monitored |
Acceleration | Usually not directly monitored | May be monitored |
Driving time | May rely on general information | May track actual trip times |
Phone use | Usually not continuously monitored | Some apps may monitor it |
Location data | Not normally needed for standard pricing | Some programs may collect it |
Driving score | Usually not used | Common in some telematics programs |
You can compare car insurance options before deciding whether a usage based program offers enough value for the information you agree to share.
Is Telematics the Same as Pay Per Mile Insurance?
No. Pay per mile insurance is one form of usage based pricing, but telematics insurance can consider much more than mileage.
A mileage focused policy primarily connects cost to how much you drive.
A behavior based telematics program may evaluate:
- Braking
- Acceleration
- Speed
- Driving times
- Phone activity
- Mileage
- Other trip information
The NAIC identifies pay as you drive and pay how you drive as different forms within the broader usage based insurance category.
This distinction matters for low mileage drivers.
Driving fewer miles may help with a mileage based program, but a behavior based program can still consider how you drive those miles.
Does Telematics Change Your Insurance Coverage?
Telematics mainly affects how an insurer evaluates risk and calculates price. It does not automatically add protection to your policy.
Your actual coverage still comes from the insurance contract you buy.
Depending on your policy and state, that may include:
- Bodily injury liability
- Property damage liability
- Collision coverage
- Other than collision vehicle damage coverage
- Uninsured motorist coverage
- Underinsured motorist coverage
- Personal injury protection
- Medical payments coverage
State requirements differ.
The NAIC explains that most states require drivers to maintain a minimum amount of liability insurance, while other coverage requirements depend on state law.
Do not choose a telematics program because of the discount and overlook the protection you need.
Who May Benefit From Telematics Car Insurance?
Telematics may suit drivers who can show lower risk driving patterns through the insurer’s measurement system.
Low Mileage Drivers
People who work from home, commute only a few days each week, or drive short distances may benefit from programs that place weight on mileage.
Drivers With Smooth Driving Habits
Drivers who avoid sudden braking, hard acceleration, speeding, and sharp turns may perform well under behavior based programs.
Drivers Who Avoid Late Night Trips
Some programs consider time of day.
A driver who mainly travels during lower risk periods may receive a better telematics result than someone who regularly drives during periods the insurer rates as higher risk.
Drivers Who Rarely Use Their Phone Behind the Wheel
Some smartphone based programs track phone activity.
Avoiding phone interaction while driving may help with programs that use distraction data.
Some Older Drivers Who Drive Less
Retired drivers may travel fewer miles than daily commuters.
For some people, combining low mileage with safe driving habits can make telematics worth comparing.
Drivers can also review car insurance options for seniors before choosing a policy.
Some Teen Drivers
A telematics app can give families information about driving behavior, and some insurers use driving data to calculate discounts or rates.
The result can work in either direction when a program allows rate increases.
Parents comparing coverage can also review car insurance for a 17 year old.
Who May Want to Avoid Telematics Insurance?
Telematics may not fit every driver.
Consider the tradeoffs carefully if you:
- Drive many miles each year
- Regularly drive late at night
- Frequently make sudden stops because of traffic conditions
- Do not want an insurer collecting detailed driving data
- Use your phone often while driving
- Share your vehicle with several drivers
- Do not want to keep location permissions active
- Have concerns about inaccurate trip identification
- Prefer a policy that does not use ongoing driving behavior for pricing
You should also ask whether all drivers on the policy must participate.
GEICO, for example, states that participation requirements can include multiple drivers on the policy, depending on the program and state.
What Are the Privacy Risks of Telematics Insurance?
Privacy is one of the main concerns consumers should review before joining a telematics program.
The Washington State Office of the Insurance Commissioner advises consumers to ask what an insurer monitors and whether they trust the company with that information. It also recommends asking whether telematics information can be used after an accident when handling a claim.
Before enrolling, ask:
- What data does the app or device collect?
- Does it collect GPS locations?
- Does it detect phone activity?
- How long does the company keep the data?
- Who can access the information?
- Does the insurer share information with service providers?
- Can driving information affect claim handling?
- What happens to stored information if I leave the program?
- Can I request or view my driving data?
- What permissions does the mobile app require?
Read the insurer’s telematics terms and privacy notice before accepting the program.
Can an Insurance App Tell If You Are Driving or Riding as a Passenger?
Smartphone telematics apps use phone sensors, location information, motion data, and program specific methods to identify trips.
Technology does not work exactly the same across every insurer.
If you often ride in another person’s car, use public transportation, or share your phone with someone else, ask how the insurer handles incorrectly classified trips.
Check whether the app allows you to review and correct a trip before the insurer uses the information for pricing.
Do not assume the system will automatically identify every trip correctly.
Can Telematics Data Be Used After an Accident?
Policies, program terms, and state rules can differ.
The Washington State Office of the Insurance Commissioner specifically recommends asking whether your insurer allows telematics information to be used after an accident to settle a claim.
Before enrolling, ask the insurer:
Can information collected by this program affect an accident investigation or claim?
Review the written program terms rather than relying only on a verbal explanation.
If you need help understanding the claim process, AtozInsuranceusa also provides a guide on what to say to an insurance adjuster after an accident.
Does Telematics Track You All the Time?
It depends on the technology and program.
A plug in device may collect vehicle information while the vehicle operates.
A connected vehicle system can send driving information directly from the car.
A smartphone app may require location, motion, Bluetooth, or other permissions so it can identify trips.
That does not mean every insurer collects the same data at every moment.
Review the insurer’s privacy terms to learn:
- When tracking begins
- When tracking stops
- Which phone permissions are required
- Whether location runs in the background
- How trips are identified
- How long information remains stored
How Long Does a Telematics Program Monitor Your Driving?
There is no universal monitoring period.
Some insurers collect information for a limited evaluation period. Others continue using recent driving information while you participate.
Allstate currently states that Drivewise can use driving behavior from prior months when updating policy pricing. State Farm says Drive Safe & Save updates the discount at renewal after it receives enough data.
Ask whether your insurer:
- Monitors only for an initial period
- Continues monitoring throughout the policy
- Requires future monitoring
- Recalculates the result at every renewal
- Lets you leave the program after enrollment
What Happens If You Stop Using the Telematics App?
The result depends on the insurer.
You may lose an enrollment or participation discount if you stop sharing required information.
Your insurer may also remove the telematics rating result and return the policy to its standard rating method.
Some programs require the app to stay active for a set period or through ongoing policy terms.
Do not delete the app, remove permissions, or unplug a required device until you understand what that action does to your rate.
Can You Opt Out of Telematics Insurance?
Many personal auto telematics programs are optional, but the exact rules depend on the insurer and state.
Before signing up, ask:
- Can I leave at any time?
- Will leaving remove a discount?
- Can leaving change my premium immediately?
- Will the insurer continue using an existing driving score?
- When will my policy return to standard pricing?
- What happens to stored driving information?
The Insurance Information Institute describes participation in telematics programs as voluntary, but specific insurer contracts control individual programs.
Telematics Car Insurance Pros and Cons
Potential advantage | Potential concern |
Safe driving may earn a lower rate | Higher risk driving may increase rates under some programs |
Low mileage may help | High mileage may reduce potential savings |
Drivers receive feedback about driving habits | The insurer collects personal driving information |
Pricing can reflect actual driving behavior | The program may track location or phone activity |
Some programs offer an enrollment discount | The discount can change later |
Apps can provide trip information | Smartphone tracking can use battery and mobile data |
Some programs help monitor teen driving | Multiple drivers may need to participate |
How to Compare Telematics Car Insurance Quotes
Do not compare only the advertised savings.
Step 1: Compare the Base Policy Price
Find out what the policy would cost before the telematics result.
This gives you a better starting point for comparing insurers.
Step 2: Ask What Data the Insurer Tracks
Request a clear list.
Pay special attention to location, phone activity, mileage, speed, braking, acceleration, and nighttime driving.
Step 3: Ask Whether Your Rate Can Increase
Some programs can raise premiums.
Others mainly adjust the discount.
This difference can matter more than the maximum advertised savings.
Step 4: Check the Monitoring Period
Ask whether monitoring lasts for several weeks, several months, or for as long as you remain enrolled.
Step 5: Compare Coverage
Make sure each quote uses similar liability limits, deductibles, and vehicle coverage.
A cheaper policy can provide less protection.
Step 6: Review Privacy Terms
Understand what data the company collects and how it handles that information.
Step 7: Check State Availability
A telematics program may work differently or may not be available in your state.
The NAIC notes that many states require insurers to receive approval for rating plans, which can affect how usage based insurance operates across the country.
Step 8: Compare the Final Price
The largest advertised discount does not always produce the cheapest insurance.
Compare total premiums from multiple insurers with similar coverage.
Common Telematics Insurance Mistakes
Focusing Only on the Maximum Discount
Maximum advertised savings usually do not apply to every customer.
Use your actual quote.
Assuming Your Rate Cannot Increase
Some programs can raise rates after riskier driving.
Confirm the rule before joining.
Ignoring Phone Permissions
A telematics app may require location and motion access.
Read what you agree to share.
Letting Another Driver Use Your Phone
Trip data may become harder to interpret if someone else regularly uses your device.
Follow the program instructions for correcting or identifying trips.
Comparing Different Coverage Levels
A low telematics quote can look attractive because it contains lower limits or different coverage.
Compare similar policies.
Choosing Telematics Without Considering Your Routine
A driver who makes long daily trips or regularly drives during higher risk hours may get a different result from someone who drives a few daytime miles each week.
Frequently Asked Questions About Telematics Car Insurance
Some telematics programs track speed or driving behavior related to speed. Others focus on factors such as mileage, braking, acceleration, time of day, and phone activity. Ask your insurer which data points its program uses.
Not necessarily. Each insurer uses its own rating model. Frequent hard braking can affect some programs, but one braking event does not automatically determine your entire rate. Review how the insurer calculates the driving result.
It can be worth comparing. Low mileage may help with programs that consider how much you drive. Your final result can still depend on driving behavior, coverage, vehicle, location, and other pricing factors.
Insurers generally evaluate a collection of driving data rather than pricing a policy from one isolated trip, but each program uses its own method. Ask how much data the insurer requires before calculating your result.
A telematics driving score and a consumer credit score are different. Telematics measures driving related information. State laws and insurer practices determine whether other insurance rating factors may also affect your premium.
Telematics programs commonly connect to a vehicle or auto insurance policy. Drivers who do not own a vehicle may need a different type of coverage. Review non owner car insurance if you regularly drive cars you do not own.
Compare Telematics Insurance Based on More Than the Discount
Telematics car insurance gives insurers a way to price part of your policy using actual driving information. It can work well for drivers whose mileage and driving behavior fit the insurer’s lower risk criteria.
It also creates tradeoffs.
You may share information about how much you drive, when you drive, how you brake, how you accelerate, how you use your phone, and in some cases where you travel. Depending on the program and state, higher risk driving can also reduce a discount or raise your rate.
Before enrolling, compare the base premium, possible rate increase, monitored behaviors, privacy terms, monitoring period, state availability, and total policy coverage.