You’ve probably heard about those small wireless devices or smartphone apps that track your driving habits. More and more drivers are choosing to use them because the data they collect can qualify you for meaningful discounts on your auto insurance.
Why Insurers Are Turning to Driving Data
Traditionally, insurance companies have assessed risk using broad factors such as age, gender, marital status, credit score, and annual mileage. While these metrics offer some insight, they don’t always reflect how someone actually drives on the road.
That’s why many insurers are shifting toward usage-based insurance (UBI). Rather than estimating your risk, these programs use real driving data collected from a device plugged into your vehicle’s diagnostic port, compatible with nearly all cars built since 1996. This personalized data lets insurers calculate premiums more accurately and reward safer drivers with lower rates.
Programs vary by carrier, but you may recognize some of the popular names: Drivewise®, Drive Safe & Save™, Snapshot®, and others.
How the Technology Evolved
The first version of these devices appeared in Houston, Texas, back in 1998. Early models required drivers to unplug the device and connect it to a computer to upload data. Later, wireless transmission made the process easier, but there was a catch: unsafe driving could trigger a penalty.
That changed in 2010 when insurers introduced penalty-free versions of the technology. Participation became completely voluntary, and drivers could earn discounts, sometimes up to 30% based solely on safe driving. Those who didn’t qualify simply wouldn’t receive a discount, but they also wouldn’t be penalized.
Since then, adoption has grown steadily. Today, nearly 30% of new policyholders choose a usage-based insurance program.
What the Devices Actually Track
These devices collect data for six months, recording factors such as:
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Time of day you drive
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Total miles driven
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Your speed (measured every second)
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Frequency of hard braking or rapid acceleration
Importantly, GPS tracking is disabled, so your exact location is never recorded. Once the initial data period ends, qualified discounts can last indefinitely, though insurers may request another review after an accident or major claim.
Drivers can monitor their own behavior, too. By logging into a secure online dashboard, policyholders can view graphs showing miles driven, speeding incidents, braking patterns, and more. What the system does not track: specific roads traveled, red-light compliance, or whether speeding occurred in a low-speed zone.
Who Benefits Most?
Insurance experts note that accident risk tends to be lowest between 5 a.m. and 11 p.m. on weekends and highest from 11 p.m. to 4 a.m. on weekdays. Drivers who regularly commute during those high-risk hours may not qualify for the largest discounts, but many still save compared to traditional rating methods.
Why More Drivers Are Opting In
One major advantage of usage-based insurance is that it encourages safer driving. Knowing that your habits are being monitored often leads to smoother, more cautious driving and insurers, in turn, see fewer claims.
Participation is flexible, too. Drivers can opt out at any time, and many companies even offer a risk-free trial period. After a month, the insurer provides a personalized premium quote based on the driving data collected.
See how much you could save! Get your usage-based insurance quote now.