How does car insurance with telematics work?

What is a telematics device?

A telematics device is typically an app that measures details such as mileage, speed, and braking time, as well as where and when you drive. Some insurers also offer a physical telematics device that plugs into a vehicle's onboard diagnostic port under the dash. These plug-in devices can measure many of the same details as a mobile app. Both plug-in and app-based telematics devices need to be plugged in or enabled for them to work, but once you set them up, they simply run in the background.

What are the advantages of telematics-based car insurance?

A few of the advantages to enrolling in a telematics-based insurance program include:

• Savings: Many telematics car insurance programs offer personalized rates based on how safely you drive. Assuming you drive responsibly and avoid unsafe behavior, your personalized driving information can lead to cheaper auto insurance rates compared to the rates riskier drivers may receive.
• Improved safety: In many cases, the driving data from telematics devices is accessible to policyholders, allowing them to develop safer driving habits.
• Additional rewards: Depending on your provider, you may receive cash back or other rewards based on good driving behavior.

What are the disadvantages of telematics-based car insurance?

There are a few potential downsides to using telematics-based auto insurance:

• Possibly higher rates: If you enroll in a telematics program but engage in unsafe driving habits, like hard braking and speeding, then you may not earn a discount or you may even receive a higher insurance rate.
• Phone usage: Since many telematics programs require running a smartphone app to work, it's possible your phone's battery may drain faster while driving, especially if you drive long distances on a regular basis.

When should you consider a telematics-based insurance program?

Using a telematics-based insurance program may make sense if:

• You're looking to save: Many insurers offer personalized rates that may lower your car insurance bill if you drive safely.
• You don't drive often: If you don't drive all that often or own a vehicle which is not driven often, then you could potentially save more on car insurance.
• You want to see how well your teen drives: Depending on your insurer, you may enroll your teen driver into their telematics program and use it to help encourage safe driving habits.

Does Progressive offer any discounts based on telematics?

Yes, Progressive offers a discount through its telematics-based auto insurance program called Snapshot®. After enrolling, in most states, you'll get an automatic discount^* followed by a personalized rate after your first policy period. In fact, drivers who save with Snapshot save an average of $322 a year.^**