Can my auto insurance premium increase based on the data collected?
Dan Levenson August 26, 2021
Most auto insurance companies now offer some form of safe driving discount powered by a telematics system. While saving money on your car insurance is a priority for everyone, knowing exactly how your discounts work can prevent confusion later on. Safe driving discounts vary by insurers as to how they are implemented and rewarded. Being informed can help you make the right decision about your auto insurance discounts.
What is a safe driving discount?
There are many types of safe driving discounts offered by each insurance company. Some of them come in the form of accident-free discounts for the length of time insured without an accident or built into the renewal rate without a specified discount. However, the most significant safe driving discounts come in the form of telematics-driven discounts.
At its simplest definition, telematics is a usage-based electronic data tracking method, most commonly through a mobile phone app. Here are the names of the safe driving discount telematics programs of several major insurers:
- Nationwide – SmartRide
- Allstate – Drivewise
- State Farm – Drive Safe and Save
- Geico – DriveEasy
- Farmers – Signal
- Progressive – Snapshot
- USAA – SafePilot
How do usage-based safe driving discounts work?
Usage-based safe driving discount programs sync to your vehicle through a mobile app with Bluetooth. Data collected varies by company but may include driving characteristics such as braking, acceleration, speed, cornering, and phone use while driving, which is then recorded and scored to determine the percentage of discount applicable. The data is collected for a period of time before the policy renewal, and the calculated discount is applied at renewal.
Many insurance companies provide a flat discount for the first renewal until enough data is collected to provide a usage-based discount.
Benefits of Safe Driving Discounts
Safe driving discounts provide several benefits for their users, and with continued use comes even more benefit.
- Participation Discount – Many insurance companies offer an initial participation discount for the first six months.
- Personalized Feedback -Along with providing a discount, either initially or upon renewal, most safe driving apps provide driving data to the user to encourage safer driving habits. This data may or may not be part of the information used by the insurance company to calculate your safe driving discount. However, it can provide drivers with a guide for areas of improvement.
- Up to 50% Savings – The maximum savings available varies by insurer, but some boast up to a 50% discount.
- Crash Detection – Many telematics programs are now capable of recognizing a crash.
Common Safe Driving Discount Concerns
Can my auto insurance increase base on the data collected?
The answer to this question varies according to the insurance company. With most companies, you could see your overall premium increase if monitoring continues from renewal to renewal. However, in these cases, the increase is due to a decrease in the discount, not an increase in the base premium. For example, if your safe driving discount is 20% for one renewal and the next renewal your discount goes down to 15% based on the data gathered, your discount went down, your base premium did not go up. You are still paying less than without the safe driving discount program participation. Of course, many other factors could contribute to an increase in premiums, regardless of your driving habits.
How is my privacy impacted?
It’s important to read your insurance company’s disclaimers regarding what data they collect and how it is used. Privacy concerns with these discounts are no different than with anything else you utilize. Each individual must make a personal decision regarding how much anonymity they are willing to exchange for the benefit provided. Some states have passed legislation that limits what information can be collected. However, ultimately, it is the user’s responsibility to ask questions and make their own determination as to value.
Safe driving discounts can provide significant auto insurance premium savings and are also a great way to self-monitor and improve driving safety. Participation is a choice, but more and more people are deciding to make that choice and enjoy the benefits afforded. Contact us for a customized auto insurance quote today.