How Can Insurance Apps Raise Your Rate
What To avoid doing
This article is for informational purposes only and does not constitute financial advice.
My neighbor recently signed up for a driving app where it tracked his driving habits and it gave him a 10% discount and promised up to a 30% discount.
Now, when he got his renewal, he was surprised to see that his rate went up in price.
The crazy part is he thought he drove perfectly. He thought he had passed the app and he was getting a bigger discount, the 20 plus% that he was promised.
Unfortunately, companies like State Farm, All State, and Nationwide have these driving tracking programs, and it's not a fit for everyone.
Yes, some drivers save 200. I've saved $360 some odd dollars, and some people have saved $500 on their policy every single year. But if you make the mistakes that we're about to talk about, your insurance rates could go higher than you expected.
Understanding What Is Being Tracked
The first piece is understanding what you're actually tracking. Most companies have this commonality of what they're going to track. There's a couple companies that add speed to it, which is one of the things that I don't love.
And some companies share the data. So, be very careful.
Make sure you talk to your agent before signing up for this. Honestly, if you're buying a car, be careful because some of the new cars actually automatically track it and you may be signing the rights to share it with your insurance.
So, make sure before you do that that you understand the scenario that you're getting into.
So, what are we tracking?
That's the most common, hard breaking acceleration, the heavy acceleration.
The speed can be a factor with some of them. Not as many as you would think. Speed is not usually a thing that the insurance cares about, but they do have that as a rating for a few of these.
The time that you drive during the day, if it's between 12 and 4 a.m., they're not loving that. And we'll go over further in depth in just a moment.
How often you drive can also play a factor. They are tracking your mileage in most cases. And most importantly, they care about you touching your phone while driving.
So, we'll go over a few pieces and some hints that you should be looking at if you're looking at one of the usage-based insurance scoring app.
Potential Discounts and Risks
Now, according to companies like Progressive, you can get up to a 30% off for their snapshot. That's a great discount.
They are one of the few companies that if you don't do well and you actually are in the higher risk areas, then your rate can go up with them.
Now, some drivers might see higher rates depending on those habits. You'd actually be shocked at how many times I see a people i talked to say, "I had a perfect driving score, but it scored me terribly and I thought I was a great driver. I broke. I did good braking. I did good."
All of these things and i just didn't like it.
1- Late Night Driving:
Sometimes they're driving after midnight. And in those cases, they don't realize that that app is on. It's always tracking while that 90-day period or that 45day period or that six-month period that it's going to run is actually tracking the data.
But, why do they consider the late night driving so bad?
Well, one is fatigue. The later you drive, in most cases, you're tired. You either got off your third shift and you're just exhausted, you're driving home, it's dark, it's time to go to sleep.
Those things can happen.
There's also a higher DUI crash rates.
If you are in an accident with a DUI , those are more severe accidents. In most cases, the late night driving is where more of that medical claim is going to happen.
And that's where insurance companies get scared that they know what your car is worth. So they know what they have to pay out if the car is damaged.
But if you get injured and they have a ton of medical insurance coverage on you, then they might have a bigger claim than they expected. They know that between midnight and 4:00 a.m. That's typically when that's going to happen. Maybe not typically, but it's more severe.
2: Braking Behavior
. Every app tracks the braking, the snapshot, the drive safe and save from State Farm, all stage drive-wise. They care about the amount or heaviness of your braking.
What triggers this is slowing more than about 7 miles per hour per second. So someone cuts you off, your drive sudden stops, a deer runs out in front of you and you have to slam on the brakes.
Some of the apps give you a little bit of leeway based on those random scenarios. So they'll say, "Okay, the first time or the first couple times we're going to cut a break and we're not going to count against them."
But the more often that it's done and the more heavier braking that you have, then the more often it's going to track it and negatively impact your score.
3: Forgetting the App Is Active
forgetting that the app is on. It's always tracking almost every time while it's being active. So, in these cases, it's going to know when you're driving. It's going to know when you're riding someone else's car. It doesn't always determine you're the passenger.
So, you've got to be a little bit careful with that. If you're taking an Uber, if you just sit in traffic.
Let's say for example that you're at a job site, at work and you're just waiting for someone. 45 minutes pass, you go to the next site and then you wait another 45 minutes. It thinks that you're driving. It thinks that you're in stop and go traffic.
So, in those cases, the length of driving puts you at a higher risk for those insurance companies.
If your spouse has your phone or you're using the plug-in device and they're driving aggressively, you may not realize it, but that could be negatively impacting the score.
You would say I'll just take them off. Well, that's the problem. Most companies don't let you remove drivers from the telematics. So, if it's everybody or nobody in most cases, yes, you can say, "I'm going to drive good. my wife's off of it or my husband's off of it or whoever's off of it. But then that will cut the discount off up based on a percentage of the number of people.
So what most of these apps will say is, "Okay, great. There's five people in the house. Only three people took it. That means we're going to cut a 20, 30, 40% off of that discount because we can't show proof that the other people that have access to your car are actually good drivers."
4: Driving Too Much
The other piece is companies give discounts on low mileage. The more that you're driving, the more risk you have. You're likely to get in an accident if you're on the road.
If you're not on the road and the car is in the garage or the parking lot, then there's less likely of a chance of something happening.
So, when it's tracking the mileage, it's looking at how often you're driving your vehicle. By the way, if you are curious, the average mileage is about 13,500. So, when insurance companies look at that, they're saying, "Okay, is this person driving more than the 13,000 m per year or they're driving less than that?"
Usually, when it hits below 8,000 miles, you'll start to see a discount. And that app is automatically going to start adding those discounts in based on that score and based on the mileage you drive. So, if you're constantly driving all over, it's not necessarily going to give you a worse score by driving a lot, but it can impact it.
5: Misunderstanding the Program
Mistake number five is people think that it's a discount only, and it's not a discount. It's a usagebased insurance score.
That score can impact your policy and your cost, your rate that you pay for your car insurance up or down.
So depending on how you score on this, you can get a good deal. They'll usually give you a discount up front, but if you don't drive good or you don't show the score as well, then you're going to have a negative impact just like you would have an insurance score or a credit score, that'll impact what you pay as well. It's not participation only.
Savings Potential
Now, Progressive does actually give an average savings. So, they're right around $130 per year, and I've seen people save over $500 per year. So, there is a significant reason you would look at doing this if you think that you fit the scenario to where you could get the best discount.
Questions to Ask Your Agent
Here's a couple things that you should ask your agent.
One, will it negative impact me?
Yes, insurance companies can rate them against you, but not all of them do that. So there are companies that if you're working with your agent, they might recommend one regardless of what
you do, the worst case scenario is you lose your discount that they gave you initially, which you didn't have in the first place. So if you get the discount, you do bad, you lose the discount. That's better than getting the discount, losing the discount, and having to pay more money because it thought you were a high-risk driver.
two is the length of this.
So when the policy ends, most of the time that renewal is when the discount kicks in. So, it's the following policy after.
If that's the case, can I shut the app off? Which in 95% of the cases, yes. Delete the app. You're done. You've passed it. You can no longer have to be tracked.
But if you know the company and you know the agent and they understand the situation, in a few cases, these companies will let you continue tracking the driving. They'll never go backwards.
So, a lot of these companies will say, "We've already given you the deal. We're not going to take the deal away."
But if you prove that you improve your score, then you're going to get a better deal on the following renewal. So you can continuously increase the discount that you get without risking losing the discount that you just created.
Real User Experiences
Now, what kind of article would this be if i didn't explain what actual real life scenarios we are seeing?
-1 And what I'm seeing most drivers saying online is on their feedback is they are getting discounts. Almost 70 plus% of the people doing this are getting some sort of discounts. So, they're really good for the price. You just got to make sure that you're a good fit.
2- they are seeing the negatives, is that their drain on their battery is larger than normal.
It usually uses the same amount of power for your navigation. So, if you don't normally use your navigation, you're going to see the drain because it will activate the navigation to track and follow you.
3- they see commonly false braking. So, that's one of the alerts that is most common that we feel we're doing good and it starts to say that we're not.
4- tracking errors.
We've seen several tracking errors across the internet.
5- , which is the biggest reason,
is privacy concern.
I personally have already lost all of my privacy because my phone tracks everything. my app, someone's listening. Like, every time I talk about going on a vacation, all these vacation things pop up all over my social media and it's everywhere. So, somehow I don't understand whether it's my TV on the wall, my phone from Facebook, whether it's the app tracking me, whatever. I've given up. Like, track me all you want. You can follow me. There you go. You've got my data. Give me the discount that I can get and I'll go forward with it.
Now, in reality with the privacy concerns, they are tracking the length of trips. So if you are worried about that, that's an issue. They do track speed in most cases and almost every company, but not all of them rate for the speed.
So just be aware of their terms and conditions. They'll likely track your speed. And some companies do give the data if requested for any type of police activity.
If there's an accident and the police say, "Give me the data." Then you might be actually incriminating when you don't think you should have been.
Braking patterns are always tracked. That's every app out there. That's the piece that they're tracking the most. And more importantly, they care about the time of day, the driving that you're doing to make sure you're not in those high-risisk time zones.
Who Benefits the Most
Now, what makes this actually worth it is low mileage drivers. If you work from home, if you drive during the day, if you're a smooth driver, you got a nice riding car, whatever it is, I don't know.
It's not good for lone commuters. It's not good for city drivers, and it's not as good for shift workers if you're working late at night.
Final Thoughts
Again, like I said, the takeaway from this is if you have good driving, if you drive smooth, and you avoid late nights, this is probably going to be a really good app for you to check out. Whether it's the Drivewise, whether it's State Farm, All State, Nationwide, almost every company carries some sort of usage based insurance driving app.
And if you think that you could pass, it's kind of fun to do. I personally have tested several of them, and I actually enjoy seeing the score that I do get.
