Telematics Insurance: How it could lower your auto insurance premium

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VIU by HUB is always looking for ways to improve our customers’ car insurance experience. Lately, we’ve been getting a lot of questions about telematics insurance car insurance programs and we want to clear up some common misconceptions for those who might not be aware of these programs. What is telematics insurance? You might know it by one of its other names: usage-based insurance (UBI), pay as you drive, pay how you drive or mile-based insurance.

Whatever name you know it by, telematics help you save money on car insurance by giving you a truly personalized rate based on your driving usage or behavior.

How does telematics insurance work?

Telematics insurance works by allowing your insurance company to track your driving, via app, Bluetooth or a plug-in device, and adjust your rates based on your personal driving data. You can qualify for discounts based on data showing that you travel few miles, are a safe driver or other programs. Car insurance companies use telematics because it’s a way for them to assess your individual risk. As a thank you for giving them this data, they might lower your rates – assuming they think your data looks good. A typical telematics based program works like this: your insurance company tells you what your auto insurance premium will be and offers a telematics device as a way to potentially earn a discount. Most companies using telematics will not penalize you or charge you more than the original stated premium regardless of what data they receive from the device.

There are two main types of telematics insurance:

  • Pay per mile programs – these are good for people who don’t drive much. The VIU by HUB Advisory Team usually offers these if the insured party drives fewer than 5,000 miles per year. These programs are why telematics are also known as usage-based insurance. They tend to charge a base rate plus a set amount per mile that you drive. There is a big potential for savings, but it can be difficult to budget given the fluctuation in monthly charges.
  • Behavior based programs – these are good for low-risk drivers in high-risk groups. Some factors like age, credit score, type of vehicle, claims history and more can raise your insurance rates. Safe drivers in these groups can qualify for discounts that offset the higher rates that they’re paying based on a perceived risk.
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Is telematics insurance worth it?

There’s no harm, and possibly a lot of benefit, from using telematics for your auto insurance policy. Even if you drive a lot and usage-based insurance discounts are irrelevant, and even if you sometimes hit your brakes a little too hard, car insurance companies won’t penalize you for your driving behavior. If telematics programs are available to you in your area, they’re likely a good idea. The worst that could happen is that you lose your discount for that month.

What are telematics car insurance pros and cons?

Telematics programs aren’t right for everyone so it’s important to weigh the pros and cons before deciding for yourself.


  • Potential to save money
  • Quantifiable proof that you’re a good driver
  • Insight into your driving and safety habits
  • Encourages safe driving habits 
  • Could provide data to prove that you were not at-fault in an accident
  • Insight into driving behavior of new drivers


  • You’re agreeing to give up some driving privacy
  • Monthly discounts fluctuate in pay per mile programs