What Is Telematics Car Insurance, and Is it Worth It?

Telematics car insurance lets your insurer watch how you drive, through a smartphone app or a plug-in device, and sets part of your premium based on that data.

Safe, low-mileage drivers can earn discounts of 10% to 30% or more. However, if you have poor driving habits, or drive more miles than expected, some carriers may actually increase your premium at renewal.

Here’s what you need to know about car insurance telematics programs.

Telematics tracks your driving electronically, and uses that data to price your policy. You enroll through the insurer's app, a plug-in device, or your car's built-in system.¹

The program measures things like miles driven, time of day, hard braking, rapid acceleration, hard cornering and handheld phone use, then sends that data to the insurer.¹

Telematics programs come in two basic types:

• Behavior-based: Tracks how well you drive

• Pay-per-mile: Counts how many miles you drive 

Both often result in discounts, but that is not guaranteed. Some carriers may even increase your premiums at renewal based on your telematics data.

A telematics discount reduces a premium by about 11%. Some insurers offer bigger discounts to good drivers, commonly up to 30% or 35%, but results vary widely. 

Your own savings depend on your mileage, the hours you drive, and how hard and how often you slam on brakes or accelerate too quickly.

Yes, with some insurers. Specifics depend on the insurer and often on your state.

Some programs will not raise your rate. With these, the worst you can do is get no discount. Other programs can raise your rate for risky driving, in at least some states.

Read the program's terms and check your state's rules before you enroll. 

There is no single best program. The right one depends on which insurer already quotes you a competitive base rate, whether the program can raise your rate, and how much driving data you are willing to share. 

The table below covers the telematics programs from some of the largest U.S. auto insurers.

Most programs collect your mileage, time of day, hard braking, rapid acceleration, cornering and, in app-based programs, handheld phone use.¹

Many also log your location and routes through GPS. Data-use rules vary by program, and some state they do not sell the driving data these programs collect.

Is telematics regulated?

Yes. Telematics is regulated at the state level, like the rest of auto insurance. Insurers generally must file their telematics rating plans with state regulators.²

Telematics may reduce your premiums if:

• You drive fewer miles than average.

• You do little late-night driving.

• You brake and accelerate smoothly.

• You rarely touch your phone behind the wheel.

• You already pay a high rate and want a way to prove you are low risk.

Follow these steps: 

• Confirm the program is offered in your state and get a quote, online or through an agent.

• Add the program to your policy. Many insurers apply a small enrollment discount right away.

• Download the insurer's app or, for plug-in programs, install it on the device.

• Drive as usual. Some programs score a fixed period, such as 90 days; others keep monitoring indefinitely.

• Your discount, or in some states a rate adjustment, takes effect at renewal. 

Telematics is just one of several ways to save. Common ones include autopay, low mileage, multi-policy bundling, paying in full, paperless billing and loyalty or renewal discounts.

Whatever the discount, use Luva to compare the same coverage across insurers before you commit. The cheapest headline discount and the cheapest actual premium are not always the same insurer.