Nerdy takeaways
- Usage-based insurance is a car insurance program that allows your insurer to track your driving behavior in exchange for a discounted rate.
- Good drivers may be able to lower their rates by signing up for usage-based car insurance, but other drivers may see their car insurance get more expensive.
- Most large car insurance companies including Progressive, State Farm and Nationwide offer usage-based insurance.
What is usage-based insurance?
Usage-based insurance is more of a discount opportunity than a type of insurance. It uses “telematics” (a kind of data collection) to evaluate driving habits.
Car insurance companies generally offer a discount on your premium if you sign up for their usage-based insurance program. If you drive safely, you may receive an additional discount once you renew or after a trial period.
Risky drivers may see their rates go up, however. For example, two out of 10 drivers participating in Progressive’s usage-based insurance program see their rates go up, according to the insurer.
Your insurer may collect data about your driving using an app or a plug-in device. Insurance companies might evaluate your driving over a 90-day period or continuously.
Is usage-based insurance different from regular auto insurance?
No. Usage-based insurance considers your actual driving behaviors into how your auto insurance rates are calculated, but it provides the same coverage as a regular policy. If you sign up for usage-based insurance, you’ll still have the same insurance coverage. And just like regular auto insurance, your driving record, vehicle and other personal factors still affect your insurance costs.
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Pros and cons of usage-based insurance
Pros
You could qualify for a large discount, up to 40% or more at renewal in some cases.
You’ll receive feedback on how to drive more safely.
You may opt out of usage-based programs if you decide it’s not for you.
Safe drivers may be able to qualify for extra perks, including giveaways, in some programs.
Cons
Your rates may go up if you don’t qualify for a discount.
You’ll need to share lots of real-time driving info with your insurance company.
Usage-based insurance isn’t available everywhere, including California where none of these programs are permitted.
Driving habits tracked by usage-based insurance
Usage-based insurance tracks behaviors related to how well you drive, when you drive and the amount you drive. That said, companies that offer usage-based insurance will value each driving habit differently.
Some of the habits that various usage-based insurance programs track are:
- The time of day you drive.
- How hard you normally brake.
- Your acceleration and speed.
- Your handling and cornering.
- Phone use while driving.
- How many miles you drive.
- Any accidents you’re involved in.
- How much time your car is idle during a trip.
Usage-based insurance vs. per-mile insurance
A few car insurance companies let you sign up for per-mile insurance. In per-mile insurance, your rates depend on the number of miles you drive. Each month you’ll pay a different amount as your mileage changes.
Even though mileage is usually an important factor in most usage-based insurance programs, it’s the main factor determining your rates in a per-mile program.
While most large insurance companies offer usage-based insurance, only a handful — including Allstate, Lemonade, Nationwide and USAA — offer a standalone per-mile option.
Is usage-based insurance right for you?
While usage-based insurance has benefits, it’s not right for every driver. You might want to consider usage-based insurance if you’re a safe driver and you’re comfortable sharing your data with your insurance company. In this case, usage-based insurance could be worth trying for the chance at cheaper car insurance premiums.
These types of drivers might also benefit from usage-based insurance.
- New drivers and their parents: Usage-based insurance can provide a way for parents to reduce their family’s premiums. Some teens and young drivers also believe usage-based programs can positively affect their driving by reinforcing safe driving habits.
- Drivers with poor credit: Having poor credit means your rates will be 49% higher than someone with good credit, on average. Usage-based insurance could help you reduce your rates if you’re normally a safe driver.
- Infrequent drivers: You might want to consider trying usage-based insurance if you rarely use your car. Mileage is usually a factor for usage-based insurance programs, and as an infrequent driver you’re less likely to be in an accident than someone who drives everyday.
Nerdy Perspective
Usage-based insurance may help some drivers lower their premiums.
I’ve had a good experience lowering my rates with my insurance company’s usage-based discount. I earned a discount of about 40% after a few months of driving, which made my current policy significantly cheaper than my last auto insurance policy was.
Which companies offer usage-based insurance?
Most of the largest car insurance companies in the U.S. offer usage-based insurance.
Usage-based insurance is similar across insurers, but there are some differences. Each advertises slightly different discounts, and they won’t all track the same driving behaviors. It’s not guaranteed that an insurer will offer usage-based insurance in your state, even if they sell standard car insurance there.
In the following table you’ll find the major car insurance companies with usage-based programs, whether your rates can increase after participating and their advertised discounts and their availability.
Insurance company | Can your rate go up? | Discount | Availability |
|---|---|---|---|
Progressive Snapshot | Yes | Progressive advertises an average discount of $328 per year, but doesn’t get into specifics. | Not available in CA, HI and NY |
State Farm Drive Safe & Save | Yes | 10% at sign-up, up to 30% or more in some states. | Not available in CA, MA, or RI. Also not always available in NC. |
GEICO DriveEasy | Yes | GEICO doesn’t advertise one specific discount. | Not available in CA, HI or VT. |
Farmers Signal | Yes | Sign-up and renewal discount for some drivers, plus the chance to be entered to win up to $100 in merchant rewards each month. | Not available in CA, FL, HI or NY. |
USAA SafePilot | No | Sign-up discount of 15%, renewal bonus of up to 30%. | Not available in CA, some restrictions in MA. |
Nationwide SmartRide | No | Sign-up bonus of 10%, with a total discount of up to 40%. | SmartRide works differently in CA and NC than other states. |
Liberty Mutual RightTrack | Yes | Sign-up bonus of 10-15%, with savings up to 30%. | Not available in AK, CA, HI, MD, NY, NC. |
Allstate Drivewise | Yes | Potential discounts vary by state. | Not available in AK and CA. |
Travelers IntelliDrive and IntelliDrive365 | Yes - IntelliDrive won’t raise rates for risky driving behaviors in DC, MT, NC and VA. Rate increases are possible anywhere with IntelliDrive365 | Total discount worth up to 30% for both versions of IntelliDrive. | IntelliDrive is available in: AL, CT, DC, IA, MD, ME, ND, NV, SD, VA, WA and WI. IntelliDrive365 in: AR, AZ, CO, DE, FL, GA, ID, IL, IN, KS, KY, MA, MN, MO, MS, MT, NC, NE, NH, NJ, NM, OH, OK, OR, PA, SC, TN, TX, UT, VT and WY. |
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