See the pros and cons of auto insurance discounts offered in exchange for using a driving tracker.

If your auto insurer says, “Get rewarded with a discount for good driving habits!” should you take them up on the offer? Before opting in, learn about the pros and cons of driving trackers tied to auto insurance discounts.

How do insurers track driver habits and what kind of data they collect?

Auto insurers look to driving behaviors to assess risk. In particular, they monitor speed, braking habits, driving frequency, fast cornering, hard acceleration, time of day driving takes place and phone use while driving. To gather data on these behaviors, they use smartphone apps or devices that plug into a car’s onboard diagnostics. The technology is formally called “telematics” but from here on we’ll refer to the apps and devices as “trackers.”

Trackers are optional.

Pros of driving trackers

When trackers reveal positive data, drivers can save money when their insurer lowers premiums as a reward for safe driving habits. These include things like avoiding hard braking and rush hour travel, not speeding and low vehicle usage. The median savings for drivers with trackers is $120, according to Consumer Reports.

For new drivers or those with poor driving skills, trackers can provide feedback they can use to modify their driving habits to become safer drivers.

Cons of driving trackers

There are a few potential cons to using driving trackers.

First, the data collected by the tracker could lead the insurer to increase your premium. For example, if it detects distracted driving, that your long commute racks up many miles or that you often drive late at night, these could be cause for charging you more for auto insurance.

Privacy is big concern too. A tracker gives an insurer a view into where you go, when and how frequently. In most cases, it’s not clear who has access to the data and if the insurer is selling data to third parties. Even if a company assures drivers that information is aggregated or anonymized, there are no regulations in place for sale or use of driver data. For many drivers, the potential saving are not worth the loss of privacy.

Depending on where you stand, it may be a pro or con if an accident occurs and tracking data is used by insurance companies or legal firms to build a case to determine blame.

Before opting into a discount-for-tracking offer from your auto insurer carefully weigh if the savings are worth the trade-offs.

 

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