You may have seen advertisements about insurance companies monitoring your driving habits and then giving you a discount on your auto insurance policy as a result of your good driving habits. All of these auto insurance companies have different names for their discount or tracking devices, but they are all grouped together under the terms Telematics or Usage-Based Insurance.
Telematics can absolutely save you money on your auto insurance if your insurer offers the program. There will be some insurers that will offer up to 25% savings on specific coverage categories on your policy. When the savings can be that good, you might be asking yourself if there is a catch?
There really isn’t any big glaring issues or problems opened by using these programs that are offered. At the time this article was written, these programs are 100% optional and the customer must opt-in to the program. Some people will have privacy concerns and it’s a great question to ask the insurance company offering the program. Other users will have concerns about being punished for circumstances outside of their control.
Our aim with this article is to inform people about telematics and to point out the good and the bad with these discount programs. We will also try to answer the most common questions regarding these types of driving tracking devices so that you can make an informed decision.
How Do Insurance Companies Track My Driving?
Insurance companies have options when it comes to tracking your driving habits. Some companies like Intact Insurance will track driving habits through their mobile application that you have to install on your smartphone.
Other insurance companies like CAA Insurance will track your driving habits using a small device that plugs into your vehicles OBD-II port. This port is the same port that your mechanic uses to read any error codes on your vehicle. The location of this port is different on each vehicle, but they are usually located by your legs under your vehicles steering wheel. These devices are not very noticeable and are rather small.
What Do the Telematics Programs Track?
As always, every insurance company will have their own rules and criteria. The most common items tracked using a telematic reader in your vehicle or the app on your phone will be:
- Fast or Hard Braking
- Rapid Acceleration
- Cell Phone Use While Driving (mobile app telematics)
- Times of Day You Drive
- Cornering and Turns (smoothness)
- Kilometers Driven
Depending on the program your insurance company provides, these categories are scored over the average of several trips. That means if you have one hard brake due to a child running onto the road, that should not have a significant impact on your overall score. Now if you have that same type of hard braking incident several times, that will have a significant impact on your overall score.
The better your overall score is on your telematics program, the higher the discount will be on your policy.
Can My Insurance Premium Go Up with Bad Driving?
Unless you are getting tickets or having accidents (claims), the use of a telematics program should not cause your insurance premium to go up. If you’re not the greatest driver on the road, your discount will just be a lower percentage.
2023 Edit: Some insurance companies have now started increasing rates for drivers who score badly on their telematics program.
Will the Mobile App Track Even if I am Not the Person Driving?
Yes. If you are using the mobile app provided by your auto insurance company, they will start tracking once it has detected you are moving in a vehicle. This counts for when you are a passenger or when you are driving.
On these apps there are usually options to let the application know you are not the driver of the current trip. It is important to remember to do this for all trips where you are not the driver, or you may be penalized for driving habits that are not your own.
Will the ODB-II Reader Track Even if I am Not the Driver?
If someone else is driving your vehicle with the ODB-II reader plugged in, it will still count as you are driving the vehicle. The tracker doesn’t know who is sitting in the driver’s seat, it just knows the vehicle is being driven and it will assume it is you.
Do I Need a Device for Each Vehicle?
If your insurance provider is using the ODB-II physical devices, you will need a device for each vehicle if your provider requires it.
If you are using the mobile application from your auto insurer, you will not need to do anything different when you switch vehicles.
Can My Insurance Company Cancel My Insurance if I Am a Bad Driver?
This answer will certainly depend on the insurance company you are with. At the time of this article, we have not heard of anyone being cancelled due to their driving habits being tracked by telematics. If you have multiple claims or tickets, your insurance company will most likely not renew your insurance policy.
Are They Tracking Where I Am?
Yes. These programs do report GPS location of your vehicle or mobile application. These factors are used in the rating algorithms.
Why Would I Sign Up for Telematics?
The savings. Some insurance companies offer at least a 5% discount just for signing up for the program and allowing them to track your driving habits. If you are a younger driver or simply a driver with higher rates, this could be a great option to help bring down your insurance premium.
The program isn’t for everyone, but it’s a great option for those looking to shave some premium off their policy.
The Wrap Up
There are some great savings available for those who are insured with an auto insurance company who offers some form of Telematics or a Usage Based insurance program.
There are downsides of these programs such as having to remember to remove any trips where you were not the driver on the app, privacy concerns, or possibly causing yourself a touch more anxiety as you try to be a perfect driver for the best rate.
Overall, these programs can save you money. If you are looking for ways to save money on your auto insurance, these programs are a great option. If you need any more information or if you need a quote from an insurance company who offers these programs, please do not hesitate to contact our office.