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Quick Answer
Usage-based auto insurance (UBI) uses telematics devices or apps to track your driving habits and price your premium accordingly. Safe drivers can save an average of 10–40% on their auto insurance. As of July 2025, programs from Progressive, State Farm, and Allstate are available in most U.S. states.
Usage-based auto insurance is a pricing model where insurers use real-time driving data — speed, braking, mileage, and time of day — to calculate your premium instead of relying solely on demographic factors. According to the Insurance Information Institute’s 2024 data, UBI programs now account for a rapidly growing share of personal auto policies issued in the United States.
With auto insurance premiums rising sharply nationwide, usage-based pricing gives careful drivers a direct path to lower costs based on behavior rather than age or zip code alone.
How Does Telematics Technology Actually Work?
Telematics collects driving data through a plug-in OBD-II device, a mobile app, or factory-installed vehicle sensors, then transmits that data to your insurer for analysis. The technology has existed since the 1990s, but smartphone GPS and cloud computing have made it precise enough for widespread insurance pricing.
What Data Does Telematics Capture?
Most programs monitor a core set of driving behaviors that correlate with crash risk. Insurers weight these signals differently, but the tracked factors are largely consistent across carriers:
- Hard braking events — sudden stops that suggest following too closely
- Rapid acceleration — aggressive throttle patterns linked to higher collision rates
- Nighttime driving — miles driven between midnight and 4 a.m., a high-risk window
- Speed — sustained driving above posted limits
- Total mileage — fewer miles generally means less exposure
- Phone distraction — some apps detect screen interaction while moving
The National Highway Traffic Safety Administration (NHTSA) links distracted driving and speeding to the majority of fatal crashes, which is precisely why insurers assign heavy weight to those variables in their scoring algorithms.
Key Takeaway: Telematics programs score drivers on 6 or more behavioral signals — including hard braking and nighttime miles — using data sourced from NHTSA-identified crash risk factors. Your score directly determines your discount tier at renewal.
How Much Can Usage-Based Auto Insurance Actually Save You?
Safe drivers typically save between 10% and 40% on their auto premiums through usage-based auto insurance programs, depending on the carrier and driving score. The savings are not guaranteed — poor scores can result in surcharges at some insurers — but most programs promise at least a small discount just for enrolling.
To understand how savings stack up across the major programs, the table below compares the leading UBI options available in July 2025:
| Program | Insurer | Enrollment Discount | Max Safe-Driver Discount | Surcharge Risk? |
|---|---|---|---|---|
| Snapshot | Progressive | Up to 10% | Up to 30% | Yes |
| Drive Safe & Save | State Farm | Up to 5% | Up to 30% | No |
| Drivewise | Allstate | Up to 10% | Up to 40% | No |
| SmartRide | Nationwide | Up to 10% | Up to 40% | No |
| IntelliDrive | Travelers | Up to 10% | Up to 30% | Yes |
Progressive’s Snapshot program is one of the few that can raise your rate if your driving score is poor. State Farm and Allstate use a “no harm” model — you can only save, never pay more than your base rate. If you are uncertain about your habits, starting with a no-surcharge program reduces financial risk.
If you are also shopping for bundled coverage, our step-by-step guide to car insurance quote comparison walks through how to evaluate multiple carriers side by side before committing to a telematics enrollment.
Key Takeaway: The best usage-based auto insurance programs offer discounts up to 40% for safe drivers, with Allstate Drivewise and Nationwide SmartRide leading on maximum savings. Choose a no-surcharge program if you want to reduce your auto insurance without risk of a rate increase.
Who Benefits Most from Usage-Based Auto Insurance Programs?
Drivers who stand to gain the most are low-mileage commuters, remote workers, retirees, and anyone who drives primarily during daytime hours on weekdays. Usage-based auto insurance rewards predictable, low-risk behavior — if your lifestyle matches that profile, the savings can be substantial.
Young drivers are a particularly important group. Traditional pricing penalizes drivers under 25 heavily because of statistical risk, not individual behavior. A 22-year-old with genuinely safe habits pays the same high base rate as a reckless peer. Telematics breaks that link. According to the Insurance Information Institute, young drivers pay some of the highest premiums in the country — making UBI discounts especially impactful for that demographic.
Who Should Approach UBI with Caution?
Not every driver is a good candidate. The following situations may reduce or eliminate savings:
- Frequent late-night driving for work (rideshare drivers, nurses, bartenders)
- Long highway commutes that accumulate high annual mileage
- Driving in heavy urban stop-and-go traffic, which triggers braking flags
- Vehicles without an accessible OBD-II port (some hybrids and older models)
If your driving profile is high-mileage or irregular, reviewing how traditional car insurance quotes are calculated may help you decide whether telematics is the better path or whether other discounts apply.
“Telematics gives insurers a much more granular view of risk. For low-mileage, daytime drivers, the savings are real and significant — but consumers should read the program terms carefully before enrolling, particularly around surcharge provisions.”
Key Takeaway: Remote workers, retirees, and young safe drivers gain the most from usage-based auto insurance, while rideshare and night-shift workers may see limited benefit. Programs with surcharge risk require extra scrutiny — always check the full terms of your auto insurance policy before enrolling.
What Are the Privacy Trade-Offs of Telematics Insurance?
Telematics programs collect continuous location and behavioral data, which raises legitimate privacy questions that every consumer should weigh before enrolling. Your insurer, and potentially its data partners, will have access to a detailed record of where you drive, when, and how.
Most major carriers outline data retention and sharing policies in their program agreements. Progressive, for example, states in its Snapshot disclosure that trip data may be used for underwriting, claims investigation, and product development. The Federal Trade Commission (FTC) has flagged connected-vehicle data as a growing consumer privacy concern, noting that data collected for one purpose can be repurposed in ways consumers did not anticipate.
Key Privacy Questions to Ask Before Enrolling
Before signing up for any usage-based auto insurance program, get clear answers to these questions from your insurer:
- Is my location data stored, and for how long?
- Can my data be sold to or shared with third parties?
- Will telematics data be used in claims investigations against me?
- Can I opt out mid-term and revert to standard pricing?
Some states, including California, have enacted stricter data protection rules for insurers. The California Consumer Privacy Act (CCPA) gives residents the right to request deletion of personal data, which includes telematics records held by insurers licensed in the state.
Key Takeaway: Telematics programs collect location and behavioral data that may be retained for years and used beyond just premium calculation. The FTC has warned consumers about connected-vehicle data practices — always read the program disclosure before enrolling.
How Do You Enroll in a Usage-Based Auto Insurance Program?
Enrollment is straightforward: contact your current insurer, ask whether they offer a UBI program, and choose between a plug-in OBD-II device or a smartphone app. Most programs run a trial period of 90 to 180 days before calculating your first discount, and your adjusted rate typically takes effect at your next renewal.
If your current insurer does not offer telematics or their discount cap is low, switching carriers is a viable option. Premiums have been climbing sharply — as detailed in our analysis of why insurance premiums are exploding — making the 10–40% savings from UBI more valuable than ever. When switching, confirm that your new carrier will honor any loyalty discounts you currently hold.
Steps to Maximize Your Telematics Discount
- Drive during daytime hours whenever possible — nighttime miles are scored most harshly.
- Maintain a three-second following distance to reduce hard-braking events.
- Use phone-mount apps to avoid distraction flags on mobile-based programs.
- Review your weekly score reports and adjust behavior before renewal is calculated.
- Bundle your policy with homeowners coverage — many insurers stack UBI savings on top of multi-policy discounts.
For first-time buyers, our tips for getting your first auto insurance cover how to evaluate telematics enrollment alongside other starter discounts like good-student and defensive-driving credits.
Key Takeaway: Most UBI programs calculate your discount over a 90–180 day trial, with savings applied at renewal. Daytime driving and consistent braking control are the two behaviors with the greatest impact on your final score, according to published driver discount guidance.
Frequently Asked Questions
Can usage-based auto insurance raise my premium?
Yes, at some carriers. Progressive Snapshot and Travelers IntelliDrive can increase your rate if your driving score is poor. State Farm Drive Safe & Save, Allstate Drivewise, and Nationwide SmartRide use a no-surcharge model — you can only stay the same or pay less than your base rate.
Does telematics insurance track my GPS location?
Most programs do collect location data as part of trip tracking. How long it is retained and whether it is shared with third parties varies by carrier and state law. Always read the program’s privacy disclosure before enrolling, and check your state’s consumer data protection rights.
How much can a safe driver save with usage-based auto insurance?
Safe drivers typically save between 10% and 40% depending on the carrier and their driving score. Allstate Drivewise and Nationwide SmartRide advertise the highest maximum discounts at 40%. Enrollment itself often triggers an immediate discount of 5–10% before your driving data is even analyzed.
Is usage-based auto insurance worth it for low-mileage drivers?
Yes — low-mileage drivers are among the biggest beneficiaries. Some programs, including State Farm Drive Safe & Save, calculate discounts partly on annual mileage, meaning drivers who log fewer than 7,500 miles per year can see outsized savings. If you work remotely or retired, UBI is strongly worth considering.
What happens if I remove the telematics device early?
Removing an OBD-II device or uninstalling the tracking app mid-term typically ends your discount eligibility immediately. Some carriers may revert your rate to the base premium retroactively for the current term. Check your program agreement before disconnecting the device.
Can I get usage-based auto insurance as a rideshare driver?
Rideshare drivers face complications with UBI because their driving patterns — high mileage, nighttime hours, frequent hard stops — tend to score poorly. Additionally, most personal auto telematics programs do not cover the rideshare period, and a separate rideshare insurance endorsement is typically required. Consult your carrier before enrolling.
Sources
- Insurance Information Institute — Auto Insurance Facts and Statistics
- National Highway Traffic Safety Administration — Distracted Driving
- Federal Trade Commission — Privacy and Security Guidance
- Progressive — Snapshot Usage-Based Insurance Program
- State Farm — Drive Safe & Save Program
- Allstate — Drivewise Telematics Program
- Nationwide — SmartRide Program Overview
- Consumer Reports — Usage-Based Auto Insurance Explained
