These days, many of us are pinching pennies wherever we can. One easy way to save money every month is by signing up for a telematics program, which tracks your driving behavior and rewards you for driving safely.
Many major insurance companies are offering discounts and rewards for customers who can prove they’re safe drivers, but there’s a stigma surrounding telematics technology. Maybe you’ve been weary of signing up for this type of program because you don’t want your insurance company collecting data on your driving habits. What exactly do they track? How do they use the information they collect? Can I really save a substantial amount of money on insurance by participating?
We want to address common concerns surrounding this topic and help you better understand what these “tracking” programs are all about. Our ultimate goal is to help you find the best insurance at the most affordable rates, and one way to do that is by taking advantage of available discounts.
What exactly is telematics?
Telematics, in relation to your vehicle and auto insurance, is a GPS tracking device that records your driving characteristics and then relays the information it collects to your insurance company. A typical usage-based insurance (UBI) program can track speed, acceleration, braking, driving time and distance per trip, and time of day.
How does it work?
If you sign up for a telematics program with your insurance company, you should receive either a tag to attach to your windshield that pairs with your smartphone or a device that plugs into your vehicle’s diagnostic port. These devices can track your driving behavior, rate your performance, and relay the information to your insurance company.
Many carriers have apps that you can install and easily use on your smartphone. These apps will give you scores and feedback so you know how well you’re driving and if you need to make adjustments. Over time, you might even improve poor driving habits and become a safer driver overall.
Ideally, safe and low-mileage drivers will be rewarded. Rewards, depending on your insurance carrier, could include policy discounts, cash back, or other incentives. Some carriers will give participants an immediate discount as soon as they opt into the program. This discount will then increase or decrease over time, based on your driving performance.
Are the discounts worth it?
Telematics programs are simple to set up and use. According to Consumer Reports, drivers can save as much as 50 percent on insurance premiums if they drive well and log low miles. If you have a low credit score and a high insurance premium because of it, proving you’re a safe driver could be a clever way to overcome this barrier and lower your rates.
On the flip side, if you’re an unsafe driver or drive more often than normal while using the program, you could be considered high risk and your rates could increase. Before signing up for a telematics program, ask your insurance carrier a few questions (next section) so you fully understand the benefits available to you, as well as the privacy risks involved.
What about my data privacy?
Having your insurance carrier track where and when you drive can feel like an invasion of privacy—we get it. Nevertheless, usage-based insurance continues to gain traction among drivers. Keep in mind that not all of these types of programs are identical. Some will only require you use the program for a short period, while others may track your driving behavior on an ongoing basis. Various programs also focus on different factors and reward you for different reasons.
To help you decide whether or not you would feel comfortable using a telematics program, ask your insurance carrier the following questions.
Questions to Ask About Telematics Programs
- What information will you collect?
- What data, specifically, will affect my insurance rates?
- Can I refuse to share certain information without being penalized?
- Will you share or sell the data you collect?
- What’s the maximum discount I can receive?
- How can I receive the maximum discount available?
- How long will you need to track my driving behavior?
What carriers offer telematics programs?
Progressive, Nationwide, State Auto, Safeco, Travelers and Liberty Mutual are some of the major companies offering telematics-based programs for their customers. If you have another carrier, be sure to ask what types of discounts and rewards they offer their customers for safe driving.
Looking for lower auto insurance rates?
If you’ve already tried a telematics program and feel like your insurance rates are still higher than they should be, it could be time to shop around for different coverage. It’s smart to reevaluate your auto insurance regularly (every six months or so), especially if your driving record changes or your rates increase for any reason.
If you’d like to see some fresh quotes from different carriers, we’d be happy to help! Visit our auto insurance page and fill out the simple quote form to let us know what you’re looking for, and we’ll be in touch soon.