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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Written byDanny Smith
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Licensed auto and home insurance agent
4+ years in content creation and marketing
As Insurify’s home and pet insurance editor, Danny also specializes in auto insurance. His goal is to help consumers navigate the complex world of insurance buying.
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Edited bySarah Archambault
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Experienced personal finance writer
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Sarah enjoys helping people find smarter ways to spend their money. She covers auto financing, banking, credit cards, credit health, insurance, and personal loans.
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Reviewed byMark Friedlander
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Corporate communications director for Insurance Information Institute
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As Director, Corporate Communications for Triple-I, Mark serves as the non-profit’s national spokesperson, sharing information and education on a wide array of insurance issues.
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Table of contents
Table of contents
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.
Quick Facts
Telematics devices track data like speed, mileage, location, phone use, and braking.
Not all insurance companies offer telematics programs.
Some telematics programs may share your personal information with third parties.
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
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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:
Pros
Safe drivers can see significantly lower car insurance rates.
Telematics programs often promote safer driving.
Drivers can often earn discounts simply for signing up for a telematics program.
Telematics insurance can provide useful data in the event of an accident.
Cons
Drivers who make mistakes (or even have minor driving inconsistencies) may see their rates increase.
Telematics programs raise privacy concerns, as they often track specific location data.
Insurance companies may share your personal data with third parties.
Telematics programs may increase stress for some drivers, causing them to become less safe behind the wheel.
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.
Company/Telematics Program | IQ Score The Insurify Quality (IQ) Score uses more than 15 criteria to objectively rate insurance companies on a one-to-ten scale. The Insurify editorial team researches insurer data to determine the final scores. | Average Monthly Cost: Full Coverage | Average Annual Savings with Telematics Program |
|---|---|---|---|
| Progressive Snapshot | 8.4 | $167 | $231 |
| State Farm Drive Safe & Save | 9.3 | $117 | Up to 30% |
| USAA SafePilot | 9.4 | $99 | Up to 30% |
| American Family DriveMyWay | 9.1 | $150 | Up to 20% |
| Erie Your Turn | 9.0 | $107 | Potential gift card rewards |
| GEICO DriveEasy | 9.0 | $155 | Varies based on driving habits |
| Allstate Drivewise | 8.9 | $131 | Up to 16% |
| Nationwide SmartMiles | 8.7 | $180 | Up to 10% after the first renewal |
| Liberty Mutual RightTrack | 7.7 | $247 | 10% when you enroll; up to 30% after 90 days |
Disclaimer: Table data sourced from real-time quotes from Insurify's 500+ partner insurance providers and quote estimates from Quadrant Information Services. Actual quotes may vary based on the policy buyer's unique driver profile.
Our editorial team spent more than 350 hours developing the Insurify Quality (IQ) Score and scoring insurance companies. The IQ Score objectively analyzes and calculates a score for insurers using more than 15 crucial criteria. The team weighted criteria by importance to the consumer — factors such as customer reviews and affordability influence the score more than availability and third-party ratings.
We rate each company on a 1 to 10 scale based on five categories: financial ratings, customer satisfaction, affordability, customer support and transparency, and availability. Insurify updates ratings once a year or as more recent information becomes available.
- Third-party financial ratings: Insurify uses data from AM Best, S&P, Moody’s, and more to compare insurance companies’ credit and ability to pay out future claims.
- Customer satisfaction: To calculate this score, Insurify analyzed more than 55,000 customer reviews across 155 car insurance companies. We also consider third-party ratings from J.D. Power, the National Association of Insurance Commissioners, and Trustpilot.
- Affordability: Our data scientists analyzed more than 90 million real-time auto insurance rates from our partners across the U.S., as well as available discounts, to calculate an affordability score.
- Customer support and transparency: This measures coverage options, ease of claims filing, and the insurer's transparency surrounding discounts, coverages, and claims process.
- Availability and reach: Insurify scores availability and reach by identifying the number of states in which insurers offer coverage and company size by market share.
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.
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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]
Telematics car insurance FAQs
If you still have questions about how telematics car insurance works, check out the additional information about the technology below.
What are the disadvantages of telematics?
Telematics insurance can actually lead to higher insurance rates if you don’t drive safely after installing the tracking device. It can also sometimes inaccurately record driving data, which could unfairly affect your rates.
What does it mean if a car has telematics?
A vehicle that has telematics typically has a device installed beneath the steering wheel. This device tracks driving habits — such as location, speed, and braking — and sends the data to your insurance company.
How does pay-as-you-go car insurance work?
Pay-as-you go car insurance works by charging premiums based on how much you drive. The more you drive, the higher your premiums will be.
Does having telematics installed reduce crash rates or claim rates?
Yes. Telematics car insurance reduces the likelihood of a crash by about 50%, according to the National Association of Insurance Commissioners.[4]
Methodology
Insurify data scientists analyzed more than 90 million quotes served to car insurance applicants in Insurify’s proprietary database to calculate the premium averages displayed on this page. These premiums are real quotes that come directly from Insurify’s 500+ partner insurance companies in all 50 states and Washington, D.C. Quote averages represent the median price for a quote across the given coverage level, driver subset, and geographic area.
Unless otherwise specified, quoted rates reflect the average cost for drivers between 20 and 70 years old with a clean driving record and average or better credit (a credit score of 600 or higher).
Liability-only premium averages correspond to policies with the following coverage limits:
- Bodily injury limits between state-minimum rates and $50,000 per person, $100,000 per accident
- Property damage limits between $10,000 and $50,000
- No additional coverage
- Comprehensive coverage with a $1,000 deductible
- Collision coverage with a $1,000 deductible
Quotes for Allstate, Farmers, GEICO, State Farm, and USAA are estimates based on Quadrant Information Services’ database of auto insurance rates.
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Sources
- Insurance Research Council. "Telematics Programs Prompt Changes in Driving Behavior, Although Not All Changes Permanent."
- Insurance Information Institute. "Background on: Pay-as-you drive auto insurance (telematics)."
- Bloomberg Law. "Internet-Connected Car Privacy Questions Prompt States to Act."
- National Association of Insurance Commissioners. "Telematics/Usage-Based Insurance."
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Danny Smith
Danny is a Brooklyn-based writer with a producer’s license for property and casualty insurance. A former editor at Insurify, he specializes in auto, home, and pet insurance. He works to translate his insurance expertise into digestible, easy-to-understand content for drivers, homeowners, and pet owners alike.
Danny has been a contributor at Insurify since March 2022.
Edited bySarah Archambault
Experienced personal finance writer
Background working with banks and insurance companies
Sarah enjoys helping people find smarter ways to spend their money. She covers auto financing, banking, credit cards, credit health, insurance, and personal loans.
Featured in
Corporate communications director for Insurance Information Institute
20+ years in insurance and communications
As Director, Corporate Communications for Triple-I, Mark serves as the non-profit’s national spokesperson, sharing information and education on a wide array of insurance issues.