Most people wish they paid a lower insurance rate. Many of the ways to get a car insurance discount involve showing your insurance provider that you’re responsible and trustworthy. Telematics insurance programs, also known as usage-based insurance or pay-per-mile insurance, are the perfect way to demonstrate your responsibility. If you’re a safe driver, telematics insurance is a simple way to save some extra money on your premium. And if you’ve got a few moving violations or other dings on your driving record, telematics insurance can help you prove your driving skills to your insurer. 

Telematics programs are a win for everyone. When drivers use telematics, they get in fewer accidents, save their insurers money on claims, and make the road safer for other drivers and pedestrians. Sounds good to us! 

How does telematics insurance work? 

Broadly, telematics insurance gives your car insurance provider information about your driving habits. Your insurer uses that information to assess your risk level. If you drive safely or drive fewer miles, your risk level will be lower, and your insurer will give you a discount. 

To get more specific, we’ll have to look at the two kinds of telematics programs: mileage-based insurance and behavior-based insurance. 

Mileage based telematics discounts 

If you drive less, you’re less likely to be in an accident and need to file a claim. Shouldn’t you get a discount for that? With mileage-based discounts, you do. Your insurer will measure your mileage with a telematics device that you plug into your car or an app on your phone, and calculate your discount accordingly. 

Since the average driver puts 13,500 miles on their car per year, you’ll usually need to drive less than that to earn a discount with mileage-based telematics programs. The less you drive, the less you’ll pay. 

Behavior-based telematics discounts 

Behavior-based telematics insurance rewards you with a discount for driving safely. Different insurance companies offer a variety of ways to track your driving habits, from apps to plug-in devices. 

These tracking methods are looking for dangerous driving behaviors such as sudden stops and rapid acceleration, driving at rush hour, and driving late at night. If you're someone who doesn't engage in any of these driving patterns, you could be in for a big discount!

Your insurer will set a trial period – usually between six weeks and six months. After you’ve been driving with telematics for that period, your insurer will assess your driving habits and set a discount. Your discount could be up to 50 percent off. However, drivers who use behavior-based telematics programs say it’s hard to meet the strict standards for the biggest discounts. Don’t stress out about it, though. While it’s always good to drive safely, most insurers won’t raise your rate even if your telematics data makes you look bad. 

How telematics measures your driving 

There are several ways car insurance companies can track your driving. The options include: 

• Mobile apps 
• Plug-in devices 
• Bluetooth beacons 
• Data from your car’s OnStar or LoJack system  

Telematics apps can send you a notification if you do something your insurance company considers risky driving. Otherwise, you’ll have to check your telematics score later to get driving recommendations and feedback. 

Telematics is sophisticated these days. Using accelerometers, GPS data, and other information from your phone or device, your insurance company will track data like: 

• Your speed and acceleration 
• Your cornering 
• Your braking 
• Your daily mileage 
• The time of day you drive 
• Whether you text or use your phone while driving 

Is the telematics or usage-based insurance discount worth it? 

It depends! If you’re a responsible driver who doesn’t mind sharing information about your on-road behavior with your insurer, you could earn a good discount with telematics. Similarly, if you don’t drive very far or very often, a mileage-based discount could save you a lot. Some insurance companies also let you discontinue telematics but keep your discount once you’ve proven you have safe driving habits. 

For the right person, telematics is worth it. But it’s not for everyone. 

Disadvantages of telematics 

When an insurer offers you up to 50 percent off, you might suspect you’re making an exchange – nothing in life is free! With telematics, the exchange is for privacy. You can earn a big discount, but only if you let your car insurance collect data about you. That data includes your location, mileage, and driving behavior. If you strongly value privacy and don’t want anyone to know where you’re going, you won’t like telematics. 

Telematics insurance is also a poor fit for long-distance drivers, people who drive mostly at night, and aggressive drivers who accelerate and brake hard. Telematics apps can also be annoying when you’re a passenger. You’ll have to go into the app to let it know your Uber driver’s bad driving isn’t your fault. 

Luckily, telematics isn’t the only way to earn a discount or cut your rates. If telematics doesn’t appeal to you, check out this list of other ways to save money on your car insurance. 

Which companies have the best telematics insurance? 

“Best” is subjective here, since each insurance company’s telematics program is different. The best telematics insurance for you might be a bad deal for someone else, and vice versa. To find the best telematics insurance for you, see which companies’ definition of safe driving is closest to how you drive. Then, compare quotes from those companies to see who’s offering you the best deal. 

Popular telematics insurance programs include: 

• Progressive Snapshot
• Nationwide SmartRide and SmartMiles 
• Liberty Mutual RightTrack 
• Allstate Drivewise and Milewise 

Should you get telematics insurance? 

If you’re a safe or low-mileage driver and don’t mind sharing your driving data with your insurer, telematics insurance could net you a good discount on your car insurance. If you’re interested in learning more about telematics programs, drop us a line. Our agents are happy to help!