Driver monitoring programs and telematics are a growing segment of the auto insurance market. With advanced features like GPS, date and time monitoring and the ability to collect data on driving habits, it’s no wonder telematics are considered by some as the future of insurance. From Allstate’s Drivewise to Progressive’s Snapshot, many insurers have embraced the use of these programs, garnering extra data to assist in their pricing of auto insurance. While all of these programs offer benefits to drivers, there are some features that may give drivers pause. From privacy concerns to seemingly unrealistic expectations for everyday driving, there are reasons to skip installing that black box. But if you’re a low-risk driver with good driving habits, a driver monitoring program could be your ticket to extra savings.

The potential for savings on your auto insurance premium is what attracts drivers to a telematics monitoring program. But is sharing your driving data worth it? We take a look.

How Driver Monitoring Auto Insurance Programs Work

Insurers have traditionally used crude data such as age, location, estimated driving mileage, Now, telematics technology can help insurers create more customized pricing dictated by actual usage and driving habits. Progressive Insurance's Snapshot program was the first, but similar programs have been offered by State Farm, Allstate, Nationwide, Travelers, and The Hartford.

Insurers do this by having you install a device in your car that gathers data. The devices differ, ranging from temporary devices that look like thumb drives to permanent devices integrated into a vehicle's computer system. In fact, car manufacturers are moving to make driver monitoring a standard feature. The 2016 Chevrolet Malibu features a teen driver monitoring system allowing parents to set various parameters and track driving habits. In Europe, which has been on the forefront of telematics, BMW and Fiat recently factory-fitted monitoring devices to enable customers to get discounted insurance. According to SMA Research, 36 percent of vehicle insurance companies will use telematics by 2020.

The insurer programs use the telematics devices to monitor several factors related to your driving, including the number of miles you drive, when you drive, how often you brake hard (defined as decelerating 7 or 8 mph in a second) and how often you exceed 80 mph. Most programs offer the ability to monitor your driving results online.

Now that you know how these programs work, is driver-monitored insurance right for you?

The Pros and Cons of Auto Insurance Telematics Programs

 

The pros of driver monitoring programs

  • Savings. For drivers who play by the rules, an auto insurance driver monitoring telematics program could significant decrease your premiums.
  • Safer driving. Thanks to an objective view of your habits that you can often monitor online, you’ll likely become a safe driver. Most drivers vastly overestimate how safely they motor, but users of telematics report they helped them change their bad habits.
  • Receive ancillary benefits like roadside assistance and theft tracking.
  • Drivers like teens and others traditionally deemed poor risks can show they are skilled safe drivers and benefit.

Of course, the biggest pro is the savings. However, before you drive off with your new telematics device, carefully review the parameters to understand what will and won’t affect your driving score and discount. Most discounts for programs like Snapshot and Drivewise fall within 10 to 20 percent. Progressive says the savings average about $150 a year. Not bad!

The cons of driver monitoring programs

  • Privacy concerns. While not all monitoring devices report your location, some do.
  • Unintended consequences. Some users note sarcastically that the software does not penalize you for driving through a yellow light, but does penalize you for stopping suddenly at a yellow light. They suggest the programs actually encourage riskier driving in some instances.
  • Lack of data transfer. If you move from one insurer to another, your data likely will not move with you.
  • Your rates could go up. Progressive recently announced it might raise rates as much as 10 percent if the data shows you're a bad driver. Expect others to follow.

Hard braking is the parameter that bothers drivers the most. After all, if a light turns yellow or a dog dashes in front of you, what are you supposed to do? But insurers say it's a predictor of accidents. In a report, Progressive defended using the data. "After analyzing Snapshot driving data, we've found hard braking to be one of the most highly predictive variables for predicting future crashes," said Dave Pratt, general manager of usage-based insurance for Progressive. "We know that one of the main contributors to hard braking is tailgating, so we're using our data to help drivers be as alert and aware as possible on the road.”

The Bottom Line

Whether a driver monitoring program is right for you all depends on what you’re looking for from an auto insurance policy. If privacy or your driving habits are a concern, it’s probably not the best way to save on your auto insurance. If you’re a safe driver and willing to let your insurer into your car, it can be a great way to save big on your insurance premiums.

Is driving monitoring right for you? Are there other ways you could save on your auto insurance? Call an InsuraMatch insurance advisor today at (844) 300-3364 and we'll help you find ways to save.

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