Telematics

Telematics combines telecommunications and data collection. In car insurance, it means using a smartphone app, a device plugged into the car's diagnostic port, or the car's built-in connected services to record driving data and send it to an insurer. It is the technology behind usage-based insurance programs.

Programs commonly track mileage, time of day, hard braking, rapid acceleration, speed and cornering, and phone apps can also detect phone handling while driving. The insurer turns the data into a score that can earn a discount or, in some programs, raise your price. Example: a driver enrolls, receives a small sign-up discount, and after a 90-day monitoring period earns a 15% discount for smooth, mostly daytime driving (hypothetical figures). pay-per-mile insurance uses telematics mainly to count miles.

Before enrolling, read how the program scores you, whether it can increase your rate, what data it collects, how long it keeps it and whether it shares it. Some automakers have shared driving data from connected cars with data brokers that sold it to insurers, which has led to lawsuits and regulatory action, so check your car's connected-services settings too. See what driving apps collect and how insurers use it and telematics programs from the major insurers compared.