Are safe driving discounts worth it?

Are safe driving discounts worth it?


With car insurance rates soaring in recent years, drivers are looking for ways to save on their premiums. Many insurers offer safe driving discounts that incorporate telematics programs, also known as usage-based insurance (UBI), to record and evaluate your habits behind the wheel.

If the data shows you’ve been a responsible motorist, you could see your rate drop by as much as 40%.

While the discounts are appealing, some companies will raise your premiums if the results show you’re not considered a safe driver. Additionally, privacy advocates worry about where all that information could wind up. 

“It comes down to consent,” said Hayley Tsukayama, associate director of legislative activism at the Electronic Frontier Foundation, a digital privacy nonprofit. “People get upset when their data is used in ways they don’t expect. Maybe you are willing to make some of those trade-offs — it’s all about clear communication.”

If you’re thinking about a safe driving discount — or you’ve already signed up for one — find out how they work, how much you could save and what the risks are.

Table of Contents

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How do safe driving apps work?

Discounts for good driving are nothing new: Insurance companies often lower rates for drivers who take a defensive driving class or who haven’t had an accident in several years. But the advent of wireless technology has meant insurers can now collect, transmit and evaluate day-to-day driving behavior in real-time.

Signing up for a safe driving discount usually means installing a plug-in device or downloading an app on your mobile phone. (Some insurers offer either option or use data from both.)

Tracker: These widgets, known as telematics devices, are usually plugged into a port beneath the steering wheel and use your car’s sensors and diagnostic systems to track your performance.

Smartphone app: Instead of onboard diagnostics, data about your driving speed, hard braking and other behaviors is captured by your phone’s internal GPS and sensors. The apps typically analyze movements — like how your phone rotates when you enter your vehicle — to determine if you’re driving.

The system tracks metrics relating to your performance behind the wheel. The specifics vary, but they typically include:

Since each insurer collects, analyzes and weighs data differently, there is no one approach to getting the most out of a UBI plan. According to Progressive, limiting hard braking and acceleration, avoiding handheld phone activity and not driving between midnight and 4 a.m. will help you optimize its Snapshot program.

Which insurance companies have safe driving apps?

These are some of the top insurers offering discounts if you allow them to monitor your driving habits. Each state has different rules about how data can be used, however, and some restrict or prohibit UBI programs.

Allstate: Up to 25% off with Drivewise
American Family: Up to 20% off with DriveMyWay
Farmers: Up to 35% off with Signal
Geico: Up to 25% off with DriveEasy
Nationwide: Up to 40% off with SmartRide
Progressive: Customers who earn a discount with Snapshot save an average of $231 a year
State Farm: Up to 30% off with Drive Safe & Save
Travelers: Up to 30% off with IntelliDrive
USAA: Up to 30% off with SafePilot

Can a safe driving app make my rate go up?

Will my driving data be sold?

Nationwide Auto Insurance

  • Cost

    The best way to estimate your costs is to request a quote

  • App available

  • Policy highlights

    Nationwide offers near-nationwide availability and personalized services, such as On Your Side® Review, a free annual insurance evaluation to ensure you are adequately protected and are taking advantage of any discounts available to you.

State Farm Auto Insurance

  • Cost

    The best way to estimate your costs is to request a quote

  • App available

  • Policy highlights

    State farm is one of the largest auto insurers based on market share and has an excellent reputation for customer satisfaction. It offers 13 discounts, including ones for safe driving and young drivers.

Farmers Auto Insurance directed CNBC Select to its privacy notice, which indicates customer data from its Signal app may be shared with third parties, including “companies that perform marketing services on our behalf or to other financial institutions with which we have joint marketing agreements.”

Farmers Auto Insurance

  • Cost

    The best way to estimate your costs is to request a quote

  • App available

  • Policy highlights

    Farmers sells car insurance in every state except Alaska, Delaware, Hawaii, Maine, New Hampshire, Rhode Island, Vermont, Washington, D.C., and West Virginia and offers a whopping 22 discounts.

According to Progressive’s privacy statement, personally identifiable data from its Snapshot app may be shared with other companies “to service your insurance policy, detect or prevent fraud, perform research, market our or our affiliates’ products and services to you or as required or permitted by law.” (Users can limit some of the marketing of Progressive and affiliate products and services, however.)

Progressive Auto Insurance

  • Cost

    The best way to estimate your costs is to request a quote

  • App available

  • Policy highlights

    Progressive offers a number of lines of insurance to allow for bundling, and convenient tools to help you keep your coverage in your budget.

“Make sure you’re comfortable if your insurer is reserving the right to sell your information to data brokers,” Tsukayama said. “Maybe you’re willing to make some of those trade-offs. It’s all about clear communication.”

How accurate are safe driving apps?

Travelers Auto Insurance

  • Cost

    The best way to estimate your costs is to request a quote

  • App available

  • Policy highlights

    Travelers auto insurance policies are affordable and backed by the sixth largest company for car insurance by market share according to the NAIC. The company also offers a number of discounts to customers, including discounts for bundling, owning a hybrid or electric car, and good student discounts.

How do I sign up for a safe driving discount?

Insurer Program Discount
AllstateDrivewiseUp to 25% off
American FamilyDriveMyWayUp to 20% off
FarmersSignalUp to 35% off
GeicoDriveEasyUp to 25% off
NationwideSmartRideUp to 40% off
Progressive*SnapshotAverage of $231 a year for drivers who save
State FarmDrive Safe & SaveUp to 30% off
TravelersIntellidriveUp to 30% off
USAASafePilotUp to 30% off

Source: Discount information from insurers. Progressive did not disclose a percentage discount

Are safe driving apps worth it?

Safe driving discount pros and cons

More ways to save on car insurance

CreditWise® from Capital One

Information about CreditWise has been collected independently by Select and has not been reviewed or provided by Capital One prior to publication.

  • Cost

  • Credit bureaus monitored

  • Credit scoring model used

  • Dark web scan

  • Identity insurance

FAQs

How much can I save with a safe driving discount?

The exact discount depends on your insurance company, your policy and where you live. Nationwide cited a maximum discount of 40%, the highest among the companies we reviewed.

What are the risks of signing up for a safe driver discount?

Depending on the insurer, your rates could increase or your information could be shared with marketing companies and other third parties.

How does a safe driving app know who is driving?

Safe driving apps use your phone sensors to analyze movements and behaviors — like how your phone rotates when you enter your vehicle — to determine if you are the driver. Mislabeling of trips can happen but users can submit corrections.

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Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.





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