Telematics in car insurance refers to programs that track your driving data, like how fast you’re driving and braking. Your car insurance company will then use that information to set or adjust your rates. Safe drivers can save a significant amount of money on their car insurance costs.
We found that telematics programs at five top companies saved drivers an average of 20% on their car insurance (about $332 a year). But drivers who aren’t so safe behind the wheel may pay higher rates for their car insurance based on their telematics information.
How telematics works for car insurance
A telematics system is a device or mobile app that tracks your information while driving. Some of the things it records include:
How fast you’re going
How quickly you stop (referred to as “hard braking”)
What time of day you’re traveling
When you buy a new insurance policy (or renew your current policy) you can ask your agent or insurance company how to sign up for a telematics discount. Many companies have them, you may have heard of RightTrack by Liberty Mutual, Signal by Farmers, or My Journey by MetLife.
Your car insurance company will give you instructions on how to download the app or they will send you a telematic device to install in your car, though devices like that are much less common today.
Whether you are using your phone or a separate telematic device, once your tracker is in place the information is then sent to your insurance company as you drive, where they review it to determine how safe (or not) your behavior is on the road.
Once your insurance company has your telematics information, they may offer you a lower rate or a discount based on your driving. Some companies, like Root, Metromile, and Tesla car insurance, exclusively offer insurance rates based on your telematics data. At standard car insurance companies, you have to opt-in to the program.
How long does a car insurance telematics program track your driving?
Drivers are typically tracked for a minimum of 30 days, though sometimes companies may track you for up to six months, before offering you a discount based on your driving information. If you cancel the program after the tracking period you will still be rated on the telematics information the company received.
If you keep the program in place, your rates will rise and fall as your habits behind the wheel get better or worse over time.
How much money can you save with telematics?
Telematics can save you a lot of money on your car insurance if you are rated as a safe driver. However, if you aren’t considered a safe driver based on your telematics, you may end up with a very small safe driver discount, or no discount at all, depending on how you drive.
We found that drivers across five top companies saved an average of $332 (or about 20%) on their car insurance with telematics programs. Progressive drivers saved an average of $922 per year, the best telematics discount we found.
Here’s how much drivers saved with telematics discounts at five top car insurance companies:
Average rate with telematics
Drive Safe & Save
Why do insurance companies use telematics?
Most of the factors insurance companies use to set your rate are based on statistics related to your personal information. Basically, insurance companies typically set rates by using your profile to calculate how likely you’ll be to get in an accident and file a claim.
Things like your age, your credit score, and your gender can all affect your rates, which means every 17-year-old is going to pay a higher rate (no matter how they drive) because teenagers statistically get in more accidents than older adults.
Telematics car insurance allows insurance companies to rate you more accurately based on your actual driving behavior. With telematics, excellent drivers who avoid hard braking and distracted driving can pay less for car insurance no matter their age, credit score, or gender.
What insurance companies use telematics?
Most insurance companies have telematics discount programs by now, with discounts for safe drivers who sign up with the program.
Telematics system name
How it works
DriveEasy looks for things like phone use and hard braking, then gives you a score based on how many times they detect these things during a trip.
Snapshot rewards drivers who avoid high risk driving such as speeding, hard braking, and texting while driving.
SmartRide is described as providing personalized feedback to help drivers make safer driving decisions like avoiding distractions and following the rules of the road.
Drivewise is similar to other telematics programs, but the company also provides driver challenges, like 10 safe trips with no high speeds or hard braking, that earn you points.
IntelliDrive ranks drivers based on avoiding unsafe behaviors, like hard braking, and making safe driving decisions, like slow acceleration.
Drive Safe & Save
Drive Safe and Save is similar to other telematics discount programs, but it allows you to register newer Ford and Lincoln vehicles directly through their built-in telematics systems, avoiding the phone app completely
When the telematics programs were originally created, many insurance companies assured drivers that you couldn’t be penalized for your driving, just rewarded for safe behavior.
But that standard is changing over time, and companies like Travelers and Progressive now state that unsafe drivers will be charged a higher rate. 
There are some companies, like Root and Metromile, that offer all-usage-based coverage, using telematics set rates for every policyholder. and Tesla offers an insurance product for their cars based on telematics information. We found that Root drivers usually pay a lot less than average for car insurance, with an average rate of $707 per year.
The downside of telematics for car insurance
Despite the potential for lower car insurance costs, there are some negatives associated with telematics.
1. Inaccurate information
Telematics devices can sense a lot of things, but they can’t sense everything. For example, most telematics systems rate you negatively for using your phone while driving (as they should) but the telematics app can’t sense who is using the phone.
This means if you let your child play with your phone while you’re driving your insurance company might count that against you.
2. High standards for safe behavior
According to Consumer Reports, many telematics systems rate you negatively for hard braking, which they commonly define as decelerating more than 6 miles per hour in one second.
However, Consumer Reports found that decelerating at 11 miles per hour (almost twice as fast as the telematics limit) was relatively gentle, not even fast enough to cause your seatbelt to lock.  If most drivers consider something a relatively gentle behavior but insurance companies think it is bad enough to label you an unsafe driver, telematics discounts may be very difficult to get.
3. Potential claims issues
Though insurance companies don’t yet use telematics for claims purposes, there is some concern that telematics may someday be used to reduce insurance payouts for claims. For example, if you are hit by someone who runs a red light, they are typically found at-fault for the accident.
But if you were speeding at the time of the collision and there is evidence of it on your telematics system, the other person’s liability coverage would love to use that as a reason to say you are partially at fault, too.
Policygenius has analyzed car insurance rates provided by Quadrant Information Services for every ZIP code in all 50 states, plus Washington, D.C.
For full coverage policies, the following coverage limits were used:
Bodily injury liability: 50/100
Property damage liability: $50,000
Uninsured/underinsured motorist: 50/100
Comprehensive: $500 deductible
Collision: $500 deductible
In some cases, additional coverages were added where required by the state or insurer. Our sample driver was a 35-year-old male. Our sample vehicle was a 2017 Toyota Camry LE driven 10,000 miles per year.
Some carriers may be represented by affiliates or subsidiaries. Rates provided are a sample of insurance costs. Your actual quotes may differ.