Do Safe Driver Apps Save You Money, or Are They Spying on You?

Safe driver programs, also called telematics or usage based insurance, are one of the most debated topics among young drivers. Whether it pays off depends on how you drive, when you drive, and which insurer's program you're looking at.

It also depends on the rating factors insurers already use about you. Our post on whether girls and women pay less for car insurance explains how those factors work, and our post on why new drivers pay more covers the ones nobody explains to you. A safe driver program is one way to add your own data to the mix.

How these programs work

Your insurer tracks how you drive for a set period, then adjusts your price at renewal. There are two ways it collects the data:

• A phone app. You install it and it records your trips while the phone is in the car.
• A plug in device. It goes into your car's diagnostic port and records driving without the phone.

Many insurers give a small discount just for enrolling, often around 10%, and then recalculate once the monitoring period ends, usually six or 12 months. Some programs have to start within the first few weeks of a policy, and some require a minimum number of trips. State Farm, for example, recalculates at each renewal, typically every six months, using up to the prior 12 months of data.

What they track

Each insurer weighs things differently, but these are the common ones:

• Hard braking. Fast stops get flagged.
• Acceleration. Fast starts can count against you.
• Speed. One program flags driving 8 mph or more over the limit.
• Phone use. Some apps flag the phone moving and the screen on while the car is moving.
• Cornering. Sharp or quick turns.
• Time of day. Late night driving is linked to more accidents, and one insurer says its program rewards avoiding driving between midnight and 4 a.m.
• Mileage. Fewer miles can help.
• Location. Some insurers collect where you drive.

The exact definition of a "hard brake" differs by insurer, so ask for the program's definition instead of guessing.

How much can you save?

Advertised discounts are the maximums, and very few people reach them. The Consumer Federation of America says average discounts are "substantially lower than the maximums," with a typical discount for one program around 10%.

What the numbers show:

• Advertised maximums (CNBC Select, 2024): roughly 20% to 40%, depending on the insurer.
• Consumer Reports 2024 survey, median annual savings: $120.
• Same survey, households with younger drivers: $245.
• Enrollment discount at many insurers: around 10%.

Consumer Reports says younger households saved the most, which is why a student with a clean record is a good candidate. Staying on a family policy helps too, and our post on using your parents' car insurance at college covers how that setup works.

Can your rate go up?

Yes, at some insurers. Consumer Reports says some companies, but not all, will raise your rate. CNBC Select asked insurers directly, and the answers split:

• Nationwide, State Farm and USAA said telematics data does not raise premiums.
• Allstate, American Family, Farmers and Travelers said rates could rise if the app rates you as unsafe.
• One major insurer's website says about 20% of participants see premiums go up.

Policies that include a low mileage reduction can also rise. State Farm says that if you have a reduction for driving under 7,500 personal miles a year and you drive more than that, your premium may rise at renewal.

Before you enroll, ask one question: "Can this raise my rate, or only lower it?" Also ask whether you can leave the program, and what happens to your price if you do.

Is it really spying?

It's monitoring you agree to, and it's more detailed than most people expect. Depending on the program, it can record where you drive, when, how fast, how hard you brake, and how you use your phone. The privacy questions are fair:

• Who sees the data? Nationwide, State Farm and USAA told CNBC Select they don't share or sell driving data. Another insurer's privacy notice says its program data may be shared with third parties, including marketing providers, though users can limit some marketing.
• Courts and police. Even insurers that don't sell data may have to respond to subpoenas, court orders or law enforcement requests.
• Breaches. Stored data can be exposed in a hack.
• Re-identification. Consumer Reports notes that "de-identified" data can be sold and later matched back to a person.
• Carmakers. Consumer Reports describes General Motors selling customers' driving data to risk profiling companies through its OnStar service, which led some drivers to pay more or lose coverage. Built in connected car programs can share data without you thinking of it as telematics, so read what your car's app agrees to.

Consumer Reports suggests asking the insurer these questions before you sign up:

• What data is collected, including location?
• Can my rate go up?
• How long is the data kept?
• Will you sell it, even if it's de-identified?

Once your data has been collected or shared, you may not be able to take it back, so read the terms and conditions first.

When it goes wrong

The programs measure behavior, and they can't see why you did something:

• A necessary hard stop counts. If you slam the brakes when a light turns yellow or a deer runs into the road, the program can still record a hard brake. One review site notes that evasive stops can lower your score even when they prevent a crash.
• Wrong driver. Phones and sensors can mix up a passenger and a driver. A passenger on a bus or in a friend's car can look like a driver in the data.
• The app only works if the phone is with you. Leave the phone at home and the drive isn't logged, which can cost you a discount.
• Accuracy complaints. J.D. Power found only 38% of safe driving app users said the data was always accurate. You can usually ask the insurer to review a trip, but it can take time.

App or plug in device?

• An app is easy and needs no hardware, but it depends on your phone, and it can record trips you take as a passenger unless you tag them.
• A plug in device tracks the car itself, so it doesn't mix up drivers. Some devices alert you when you brake hard or accelerate fast, and some drivers find that stressful. Ask what yours does before you plug it in.

Choose based on how you drive and what you'll tolerate. If you'd rather not be alerted, ask whether the program has a silent option.

Who should try it, and who should skip it

A good fit for

• Students and younger drivers, who have the highest rates and, per Consumer Reports, the biggest median savings.
• Low mileage drivers, such as retirees who drive mostly to appointments, and anyone who drives less than average.
• Careful drivers who follow the speed limit and brake gently.

Probably not a good fit for

• People who drive late at night or on a night shift. If your schedule puts you on the road between midnight and 4 a.m., that can count against you. The Consumer Federation of America says lower income night shift workers can be penalized by programs because they have little control over when they drive.
• High mileage drivers, whose mileage can raise the premium.
• Drivers who spend a lot of time in stop and go traffic or on steep roads, where braking is hard to avoid.
• Anyone uncomfortable with the data collection. Your comfort counts as much as the discount.

One more skip deserves its own note: delivery drivers. Heavy mileage and long hours can hurt your score, and delivering on a personal policy has its own risks. Our delivery insurance post explains them.

Before you enroll

• Read the terms. Note what's collected and how it's used.
• Ask whether your rate can rise.
• Ask how the program defines hard braking, speeding and late night driving.
• Check whether it's offered in your state. Some programs aren't available in every state.
• Search the program's name with "reviews." Other users' experiences show where the surprises are.
• Know how to opt out, and what happens to your discount if you do.
• Try it for the first monitoring period before deciding.

The bottom line

A safe driver program can save you money, especially if you're a young, careful or low mileage driver, but the discount is rarely the headline number, and some insurers can raise your rate. It also means sharing detailed data about how and where you drive. If you're comfortable with that and your driving fits the program, it's a reasonable trade. If you drive late, drive a lot, or dislike being tracked, you can skip it.