You’ve probably come across the idea that some insurance companies offer programs that monitor your driving habits through telematics technology. The idea is simple: drive safely and responsibly, and you might score a discount on your premiums. These companies use the data they gather from these devices to help determine your rates. But how exactly does this technology work, are they worth it, and are there any potential risks you should be aware of before signing up? Let’s break it down.
What is a car insurance tracking device?
Car insurance tracking devices, also known as a "black box", are typically small gadgets that plug into your car and collect data from its computer, which is then sent to your insurance company. Don’t worry—they won’t affect how your car runs. They won’t limit your speed or control when or how you drive, and they won’t cause any damage to your vehicle either.
Some insurance companies may instead have you use an app you can download onto your smartphone. However, this option cannot collect as much data as using an actual device connected to your car.
How do car insurance monitoring devices work?
It depends on which type of tracking device you're using. Let's explore the two types of insurance monitoring devices outlined below:
Physical device
Physical insurance trackers, or telematic devices, plug into your onboard diagnostic (OBD-II) port, usually located below your steering wheel—the same one a mechanic uses to check your car's computer for issues.
The device taps into your car’s onboard diagnostic system and sensors to keep an eye on things like fuel and oil levels, mileage, and tire pressure. Once it’s plugged into the OBD-II port, it can track details like where you drive, how far you go, your speed, and how you brake, along with other driving behaviours.
Mobile app
If you're instead using an app, all you need to do is download the app on your phone and sync it with your car. The app uses your phone’s sensors to collect data on your driving habits. While it doesn’t have direct access to your car’s OBD-II port like a physical tracker, it can still pick up on things like sudden acceleration and hard braking.
This information helps insurance companies pinpoint their safest drivers, allowing them to offer car insurance discounts as a reward. They typically provide the device as part of a usage-based insurance (UBI) program.
What is usage-based insurance (UBI)?
A usage-based insurance (UBI) program uses telematics to track your driving habits and calculate a personalized premium. UBI programs are great for safe drivers looking to get a discount that reflects their good driving. Riskier drivers, whether due to past records or inexperience, can also sign up, though some companies might raise rates if they notice unsafe driving.
Another option is pay-per-mile insurance, which charges based on how much you drive rather than how safely you drive. This option is great for someone who doesn't drive too often, like if you work from home. These telematics programs are optional—you have to choose to participate and use the device or app to track your driving. If you don't end up getting a discount, you can usually opt out.
What does a car insurance tracking device track?
Your insurance tracker will track things like your speed, braking, mileage, and when you’re driving. However, it can track more than just that, such as:
- Your speed
- How hard you brake
- How quickly you accelerate
- How fast you take corners/turns
- Your total mileage
- Where your car is located
- The date and time of your trips
- How often you're on the road
- Whether you make or receive phone calls using your car’s system while driving
Most insurance companies that offer tracking programs are pretty transparent about what data they collect. You can usually find this info on their website or by asking an agent or broker. They’re mostly interested in your typical driving habits, especially those that could either lead to car accidents or help you avoid them.
While insurers use this data to set your rates, it can also benefit you. Many smartphone apps have a dashboard with feedback so you can track your driving. If you notice frequent hard braking or distracted driving, you can make adjustments to improve your habits—and possibly lower your insurance rate.
Pros and cons of using an insurance tracker
There are both benefits and drawbacks to having telematics systems or trackers monitor your driving. These devices might be a good fit if you’re interested in programs like usage-based insurance (UBI), which adjusts your rates based on how you drive. If tracking lowers your premiums, it can be a win, but there’s also a chance it could cost you more than traditional insurance. We will delve into the detailed pros and cons below:
Pros
Here are the advantages of using an insurance tracker:
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If you’re a cautious driver—no speeding, minimal hard braking, and staying focused—you could see a drop in your rates with UBI programs.
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Letting your insurance track your driving can help you spot areas to improve, making you a safer driver over time.
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Some programs are great for people who don’t drive much, like pay-per-mile insurance, which tracks how many miles you drive, typically over a month.
Cons
Here are the disadvantages of using an insurance tracker:
- If you frequently engage in risky behaviours, like distracted or reckless driving, telematics insurance might end up costing you more than a traditional policy.
- If you have a lengthy daily drive or frequently drive at night, letting your insurance company track your mileage could end up increasing your costs as more time spent on the road or nighttime driving means a greater risk of car accidents.
- Insurance monitoring apps can’t always distinguish whether you’re the driver or just a passenger, so if you’re riding in someone else’s car, it could affect your tracking profile.
What are the risks of using a tracking device?
While the potential cost savings and personalized insurance options can be appealing, it’s important to understand the risks before using a car insurance tracking device. Here are some potential risks associated with using tracking devices:
Being a passenger
This one's specifically if you use an app instead of a physical device. If you spend a lot of time as a passenger, it can get frustrating because some mobile app tracking programs can’t tell that you're not the one driving. This means you might end up having to dispute a lot of the data the app collects.
Privacy
An insurance company's tracking device collects data about you and your driving habits, which raises concerns about privacy. Every time you drive, the device could track your routes, potentially revealing your daily routines, where you go, and even personal appointments. That data might not just be used for setting your insurance rates—it could be sold to third-party marketers or other companies.
Your data is valuable, so it’s important to understand when and how you’re being tracked. If you’ve given permission to an app, it might be connected to other apps and could even be active when you’re not driving.
Hacking
With hackers being a concern these days, some people worry that their driving data could be stolen and misused. However, insurance companies usually encrypt the information they collect from your car, making it useless to anyone who might try to intercept it. However, keep in mind that not all insurance companies may have strong security measures in place, which could leave your driving data vulnerable to breaches.
Sharing data
Most companies also commit to not sharing your data with anyone except law enforcement and only when required by law. However, there have been cases where data from these devices was subpoenaed in legal proceedings, meaning your driving habits could potentially be used as evidence against you. If you’re concerned about security, it’s always a good idea to ask your insurance company directly.
Can tracking devices help lower your auto insurance premium?
Yes, using a tracker can generally save you money on your car insurance. In fact, some companies might give you an immediate discount just for agreeing to use their tracking device. As long as you’re a safe, responsible driver and don’t drive often, the tracker will report that back to your insurer, which could lead to a lower premium.
Traditional car insurance rates are based on factors related to your driving profile, but they don’t reflect how you personally drive on a daily basis. When you have an insurance tracker, your insurance company bases your rate on your current driving habits and rewards good behaviour with discounts. So, the safer you drive, the more you can save.
Most companies also offer ways for you to keep an eye on your potential savings. For instance, you might be able to use insurance apps to see in real-time if your driving habits are helping you save. The information often updates regularly, giving you a clear picture of your current insurance costs and any savings you’re racking up.
Can a tracking device help young drivers?
A car insurance tracking device can be really helpful if you have young or student drivers at home, as it allows you to monitor their driving and keep them safer on the road. Since car accidents are the leading cause of death for teenagers, having a way to track things like speed, location, acceleration, and braking can give you peace of mind and help guide your teens toward safer driving habits.
Further, car insurance for young drivers is notoriously high, so using telematics devices can help them get a lower insurance rate by showing the insurance company that they are responsible and safe drivers. But using an insurance tracker isn't the only way to save on car insurance; there are many things that young drivers can do, like completing a government-approved driving course and opting for a higher deductible.
So, should you use a tracking device?
The answer really comes down to how you feel about it. Plenty of drivers have embraced these trackers as a fair way to potentially save money. If your insurer sees that you’re a low-risk driver, they’re more likely to offer you better rates. Plus, watching your insurance costs drop can be a great motivator to keep improving your driving habits to help you become a safer driver.
Contact BrokerLink today to learn more about insurance trackers
If you're on the hunt for lower insurance premiums, and using a car insurance tracker sounds right up your alley, contact BrokerLink today. We can help you with any questions you may have about telematics devices, including questions like "Will driving late at night affect my insurance rates?" and "Does where I drive really make a difference?"
You can reach us by phone, email, or in person at any one of our locations throughout Canada. No matter how you choose to get in touch, a BrokerLink insurance advisor will be happy to assist you. We also encourage you to take advantage of our free online quote tool that can provide you with a competitive quote in minutes.
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FAQs for car insurance trackers
Is an insurance tracker the same thing as tag tracking?
No. An insurance tracker helps your insurance company track details like where you drive, how far you go, your speed, and how you brake, along with other driving behaviours. Tag tracking, on the other hand, uses small RFID trackers with anti-jamming technology to help locate your stolen vehicle.
Does having a tracker reduce car insurance?
Yes, these trackers can help you save on your car insurance. If you're a safe, responsible driver and don't spend a lot of time on the road, the tracker will report that to your insurer, which could lead to a discount on your premium.
How much does a telematics device reduce car insurance?
Depending on your insurance company, you could get a discount of up to 25% or more just by driving more carefully and reducing the number of kilometres you drive.
Can your insurance company see your location with an insurance tracker?
Yes, if the insurance company has access to your car or mobile phone's GPS data, they could potentially track your location.
What are the risks of using an insurance tracker?
Depending on the program, driving unsafely could lead to higher insurance rates. Also, it’s important to understand what data the tracker collects and how the company will use it.
If you have any questions, contact one of our local branches.
