Okay, you saw a recent commercial advertising a “personalized rate” based on your driving. Should you sign up for such a program?
Pretty much all insurance companies now offer these programs, and they do offer a way to reduce your car insurance costs; so how do they work and are they worth it for you?
(My quick take if you don’t want to read any further is that it is usually worth doing, but there are a few important questions to ask before signing up.)
How much will I actually save?
Although companies tout big numbers—UP TO 30%!—the reality is that most people will average between 5-15% savings.
For all companies most people will continue to save some money, but some companies don’t guarantee a discount. In fact, some insurers may raise your rates if the app gathers what a company considers to be riskier driving behaviors.
How do these programs work?
In short, these “telematic” apps use your phone to develop an overall portrait of your driving habits, and then they use that portrait to set your rate. Travelers has IntelliDrive, Progressive has Snapshot, Safeco has RightTrack and so forth.
What do they track?
They use sensors in the phone to track driving characteristics like acceleration, time of day driven, hard-braking, and phone interactions.
Are these apps a hassle to use?
While these apps have gotten much easier to use, they typically do require a bit of attention over several months. That may or may not be worth it to you.
Are the apps accurate?
On average! It’s important to remember that these apps, while not perfect, are designed to give an accurate portrait of how you drive on average.
So for instance, when our family used one, we noticed that there would be an occasional trip that it got wrong; however, that was just one data point out of many. The intersection of Farmington and 170th was my personal nemesis for hard braking!
Even still, on average, it painted a fairly accurate picture—that I’m the best driver in the house! (Even in the face of such hard data, this remains contested . . .)
What about Big Brother!?
This is the most common objection I hear from people and there are two main routes.
The first is to refuse to give your driving data to the company. (I harbor no ill-will for people who want to minimize the tracking.) Essentially, you just need to know that you’ll likely pay more for keeping your driving data to yourself.
The second approach is to share your driving behavior with the insurer so they can price you more accurately than without it.
Many people take the tradeoff on a fairly pragmatic basis like they do with all the other apps on their phone.
If you have a smart-phone, you’ve pretty much already crossed into the land of giving out loads of information about you. Whether you use a music app, an exercise app, or a navigation app such as Google Maps, those companies aggregate the information you provide to give more product features (love it) and to sell targeted ads (don’t love it).
And so, the argument goes, since the phone is already tracking much of this information, why not just get a more direct discount for your data?
Important questions to ask before signing up:
Does my entire household need to use this?
Some companies will want all drivers in the household to sign up. Others are fine going person by person. And some companies offer devices that plug into each car instead.
How long do we need to keep this installed?
Most companies now ask you to keep the app on your phone permanently.
Does it track phone use in the car?
Almost all apps track the braking, acceleration and time of day driving, but some also track phone interactivity as well.
If you are a person who handles your phone frequently driving, this is a chance to break the habit. If you are a person who hands the phone to your kids while driving, probably best to avoid the app.
Am I guaranteed a discount at renewal?
Some carriers guarantee a savings at renewals, while others may actually surcharge you. Most people do see continued savings.
Can I request a mulligan (or a redo)?
Good to know how often it applies your driving history to the rate. (Just at renewals?)
Anything else new with these?
I loved it when companies like Safeco and Travelers offered a 90-day tracking option, but it looks like those days are coming to an end. Nearly all companies want the app enabled all the time now.
Also, more and more car manufacturers are integrating the tracking features into the cars and, at your option, will share this information with insurers for more accurate pricing. (I do like this one a bit better since I don’t have to be running an app on my phone, but I don’t like that the car manufacturer is collecting the data, using it for what? and then, sharing and reselling it to third parties.
I’ve never purchased a new car so am not sure, but you are supposed to be able to decline this option.
Why would I sign up?
These are all sensible reasons to sign up.
- You’re comfortable giving them driving data to save money.
- You want to prove you’re the best driver in your family.
Why wouldn’t I sign up?
These are all sensible reasons to not sign up.
- You don’t want to hassle with another app.
- You don’t want to share that information.
- You drive or ride in vehicles for your work, so it’s too complicated.
- You want to keep the family peace, and not ask family members to do it as well.
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