Telematics or pay-how-you-drive insurance programs track your driving via your phone or another device. Based on the data they collect, including your driving habits, location, when you drive and more, you could save up to 30% on car insurance costs.
What is telematics insurance?
Telematics is a use-based insurance program (UBI) that uses GPS-tracking to gather data about your driving habits as you drive.
Data gathered by a telematics device might include things like:
- Fast acceleration.
- Hard braking.
- Speeding.
- Miles driven.
- Nighttime driving.
All of these factors help your insurance company understand how often (and how well) you drive. Using these insights, insurance companies can tailor your auto insurance premiums based on your needs.
While most drivers do save with telematics programs, it’s important to remember that your rates can increase if you engage in risky driving behavior with some providers, such as Progressive and Travelers.
Learn more: How to score the best car insurance discounts
How telematics insurance works
Telematics technology and programs can be divided into two categories: mileage-based and behavior-based.
Mileage-based telematics:
This type of telematics is often used in pay-per-mile insurance. Rather than paying a fixed monthly rate, you’re charged a base rate along with a per-mile fee. Your annual mileage is monitored by telematics, and the number of miles you drive will determine your auto insurance rate.
Behavior-based telematics:
This type of telematics tracks your driving habits. If you’re a safe driver, your insurance company may use this data to give you a discount on your monthly insurance premiums.
Not all telematics programs use plug-in devices to monitor your driving. Some newer cars come with telematics installed, and most insurance providers or car insurance brokers, like Jerry, use mobile apps to gather telematics data.
With Jerry’s telematics program, for example, you’ll receive instant feedback on your behaviors and tips to help you improve even more every time you get behind the wheel. Then, we’ll combine that data into a personal driver score that can help you earn rewards for safe driving.
Learn more: How is car insurance calculated?
Is telematics insurance right for you?
Telematics offers a simple and effective way to save on auto insurance rates if you are:
- A low-mileage driver: Don’t drive often? Telematics programs can track your driving habits and lower your rates according to how frequently you get behind the wheel.
- A good driver: Your driving data could earn you a discount on your car insurance if you avoid things like speeding, hard braking and fast acceleration.
- A young driver: Telematics can help you learn more about your driving behavior, which is great for those just starting out behind the wheel. With these programs, you can use your telematics data to build good driving habits and maybe even earn discounts on your car insurance premiums
In some states, you might experience restrictions on telematics programs. To be sure you can use telematics programs in your state, contact your local DMV.
The best insurance companies with telematics insurance
Several popular car insurance companies, including Progressive, State Farm and Geico, offer telematics programs. Here are some of the most popular:
| Insurance company | Program | Average sign-up discount | Potential savings |
| Progressive | SnapShot | $94 | $231 |
| State Farm | DriveSafe and Save™ | 10% | 30% |
| Nationwide | SmartMiles (mileage-based) SmartRide (behavior-based) | SmartMiles: 10% SmartRide: 10% | SmartMiles: N/A SmartRide: Up to 40% |
| Geico | DriveEasy | Drivers earn participation discount (amount not disclosed) | N/A |
| Allstate | Drivewise® | Drivers earn participation discount (varies by state) | 30% |
Learn more: The best car insurance companies
The pros and cons of telematics insurance
While telematics can benefit drivers, there are some drawbacks, such as availability, privacy concerns and more. If you’re deciding on whether you should invest in a telematics app, consider the following:
The benefits of telematics programs
- Can give you discounts on your auto insurance premiums.
- Teaches you about your driving habits through well-timed tips.
- Alerts you to potential hazards on the road.
- Helps to minimize operating costs by tracking idling time.
The drawbacks of telematics programs
- Information about your driving habits, location and more may become available via your telematics device.
- Not all insurance providers offer telematics programs in all states.
FAQ
-
What is a telematics device?
-
Is telematics insurance worth it?
-
What’s the difference between telematics and black box?
Kayda Norman is an insurance writer and editor with more than 12 years of content experience. She previously worked at NerdWallet as an insurance writer and content management specialist. She has covered a wide range of insurance topics such as high-risk drivers, auto insurance rate factors, and credit-based insurance scores. Her work has been featured in The New York Times, The Washington Post, and USA Today.
Liz Jenson is an insurance writer who specializes in general automotive and insurance topics. Liz’s mission is to produce informative and useful content to help car owners make smart choices when buying cars and car insurance. Since joining Jerry in 2021, Liz has written nearly 4,000 long- and short-form articles on topics including state-specific insurance recommendations, common car insurance questions, and deep dives into vehicle model details. Before they came to Jerry, Liz was a full-time student at Indiana University, Bloomington working on a double major in English and French.
