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Good Drivers Save Money with Auto Insurance Telematics

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Telematics apps that help insurers monitor their policyholders’ driving are taking off, and good drivers can benefit from using them.

These apps have been coming into the market and more carriers are offering to provide discounts to policyholders who install them. And as the apps continue evolving, in the near future they’ll have even more features that may truly customize your auto insurance premium to match the risk.

Safe driving often results in lower auto insurance rates, and a telematics mobile app installed on your smartphone can give an insurer real data on your driving habits. While this technology is not new, the sophistication of the data that they collect is growing. 

Some car insurance companies advertise that drivers can save up to 25% or 30% on their premiums for being a safe driver with a telematics program. However, the app may also identify unsafe driving habits that can result in rate hikes instead.

How Telematics works

Telematics car insurance programs collect data to rate how safely you drive, as well as your mileage. They track acceleration, speed, deceleration, distance driven, when you drive and where you drive to calculate your risk level. If you pose a lower risk of accident than the average driver, you can save money on your auto premiums.

When you sign up for a telematics program, insurers will typically give you an enrollment discount up to 10% of your annual premium. You’ll be required to download an app or the insurer will send you a telematics device that plugs into your car.



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Telematics devices will usually plug into an onboard diagnostic (OBD-II) port, which is commonly found beneath the steering wheel. This method relies on your car’s onboard diagnostic system and a network of sensors that tracks key performance indicators.

Telematics devices and apps will typically track the following:

  • How often you drive, and for how long
  • Hard-braking incidents
  • Fast acceleration
  • Speed
  • Fast cornering (quick, sharp turns)
  • Time of day you drive
  • Phone usage while driving.

The insurer will monitor your driving for a period of time, usually 90 days, after which they will evaluate your driving and decide on a final discount. Many carriers offer discounts of up to 30% for the drivers they deem the safest or at lowest risk of being in an accident.

How to get the best insurance discount

Drivers who see the best discounts may include stay-at-home parents, remote workers, retirees and gentle drivers. To get the biggest discount:

  • Avoid driving during rush hour and at night.
  • Drive a below-average number of miles.
  • Avoid harsh braking and cornering.
  • Avoid accelerating quickly.

Pros and cons of Telematics

There are advantages and disadvantages to telematics insurance:

Pros

  • Large discount potential.
  • Rewards for being a good driver.
  • An incentive to improve your driving habits.

Cons

  • Some programs can raise your base rate if you’re a bad driver.
  • Discounts fluctuate based on driving habits.
  • Mobile apps can’t always tell if you are a driver or a passenger, so if you’re riding in someone else’s car you may occasionally need to dispute the data.
  • Privacy concerns about being tracked.

The takeaway

Traditional car insurance costs are based on factors relating to your driving profile, none of which have to do with how well you drive day to day. On the other hand, telematics insurance programs base your rate on your current driving habits or give discounts for good behavior on the road. With telematics, the better you drive, the more you can save.

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