What Is Telematics Car Insurance? A Complete Guide to Smarter, Cheaper Coverage
While telematics car insurance can save some safe drivers money, it can also cost you if you’re not careful behind the wheel.
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Telematics is a technology that monitors a vehicle’s usage. Many insurance companies offer telematics car insurance, sometimes known as usage-based car insurance.
These programs track a driver’s performance, providing data to the insurer that affects premiums. Safe drivers and people who don’t drive often can sometimes benefit from telematics and see lower rates. Additionally, 34% of drivers said they began driving more safely after joining a telematics program, based on a 2020 study by the Insurance Research Council.1
Here’s what you should know about telematics car insurance.
How telematics insurance works
Telematics insurance works by tracking how you drive and adjusting your premium based on the collected data.2 Either a device you install in your car or the insurer’s mobile app tracks your driving data. Safe drivers can benefit from these programs, but bad drivers might see their rates increase.
Some of the main telematics data points that most programs track are:
Speed
Mileage
Location
Braking
Acceleration
Trip time
Phone use
Pros and cons of telematics insurance
Telematics insurance doesn’t always save you money. Your rates can actually increase if you drive poorly or engage in unsafe practices behind the wheel, like using your phone. These are some of the main benefits and drawbacks of car insurance telematics programs:
Best car insurance companies with telematics programs
Many insurers offer usage-based insurance options using telematics devices. Insurify identified six of the best car insurance companies that not only offer telematics insurance but also have high Insurify Quality (IQ) Scores.
Here’s what you need to know about the telematics programs from each of these top-scoring insurance companies.
Allstate Drivewise
Potential savings: 10%–16% of your policy’s cost
Availability: Drivewise isn’t available in California or Alaska
May be good for: Safe drivers who want to save a little extra on their policy
With Allstate’s Drivewise telematics program, drivers install the Allstate app and enable the Drivewise feature to participate. Drivewise tracks driving behaviors like speeding, sudden braking, and late-night driving.
Every Allstate driver is eligible for Drivewise. You simply need to download the smartphone app and enable the Drivewise feature. You’ll get a 10% discount on your policy for signing up and 6% off by staying in the program.
Allstate Milewise
Potential savings: Varies
Availability: Milewise is only available in Delaware, Idaho, Minnesota, Washington, Wisconsin, and West Virginia
May be good for: Drivers who don’t go very far or drive infrequently
Allstate’s Milewise program works by tracking how much you drive and charging you variable premiums based on that data. You’ll pay a fixed base rate plus a per-mile rate — the more you drive, the more you’ll pay, and vice versa. Milewise is a good choice for people who don’t drive frequently or who drive only short distances.
Nationwide SmartMiles
Potential savings: Up to 10% for safe driving after your first renewal
Availability: SmartMiles is unavailable in Alaska, Hawaii, Louisiana, North Carolina, New York, and Oklahoma
May be good for: People who drive less than the average driver
Nationwide’s SmartMiles program is a pay-per-mile car insurance program. It charges you a base auto insurance rate and a variable cost-per-mile rate. But if you take a long trip, only the first 250 miles will count toward your auto insurance premium in a single day. Drivers can save up to 10% off their policy cost if they drive safely and renew after the first policy term.
Liberty Mutual RightTrack
Potential savings: Up to 30% for drivers who complete the program
Availability: RightTrack isn’t available in Alaska, California, Hawaii, Montana, North Carolina, North Dakota, South Dakota, Washington, or Wyoming
May be good for: Infrequent drivers with safe driving habits
Liberty Mutual’s RightTrack is a traditional telematics program that tracks your driving habits. It tracks behaviors like hard braking, nighttime and rush hour driving, frequency at lower speeds, distracted driving, acceleration, and time of day.
Participants get a 10% discount just for signing up, and they can earn a discount of up to 30% for staying with the program for 90 days.
Data and privacy concerns of telematics
While telematics programs can be helpful for some drivers, they can come with some data and privacy concerns. Some auto manufacturers have been found to sell driving data to insurance companies, unbeknownst to the drivers, according to a recent report by the New York Times.
One driver, Ken Dahl, found that LexisNexis had analyzed his driving data recorded through GM’s OnStar Smart Driver program that he had in his Chevy Bolt. The company used this data to create a risk score, which it then sold to insurers. Dahl’s car insurance rates then suddenly increased by 21%.
New York, California, New Jersey, Montana, Kentucky, and Tennessee all have or are considering laws that restrict the use of telematics technology.3