Glossary
Telematics discount, defined
A premium reduction earned by letting the carrier monitor driving behaviour through a mobile app or a plug-in device for a set period, usually a few months. The carrier scores hard braking, rapid acceleration, speed, time of day, phone handling and distance, and adjusts the price at renewal.
In practice
Most programs offer a small reduction just for enrolling and a larger one based on the score; some carriers can also raise the premium for a poor score, and the enrolment terms say which. The app records phone use while moving, so a passenger who texts can be logged against the driver unless the trip is reclassified. Night driving and hard braking weigh heavily, which penalises shift workers and city driving even when nothing goes wrong. Data handling varies; the privacy terms are worth reading. The program is usually optional and can be dropped, though the reduction goes with it. For a careful driver with a short daytime commute it is the largest single credit available on many policies.
A worked example
Suppose a driver's premium is $1,600 a year and the carrier offers 5% for enrolling and as much as 25% for the score. She drives mostly by day, brakes gently and leaves the phone alone, scores well, and renews at about $1,240. Her partner, who works nights and drives hard, scores poorly and renews at the same $1,600 or slightly more. Hypothetical figures.
Applies to: Auto Insurance