Telematics: How Driving Apps Can Save You Money on Car Insurance

Car insurance has always been one of those expenses that feels a little unfair. Two people with very different driving habits—one safe and cautious, the other aggressive and reckless—can end up paying nearly the same premium just because they share the same age, gender, or zip code. Insurers have relied on broad factors like demographics and credit scores to price policies for decades. But what if your actual driving could speak for itself?

That’s exactly what telematics has made possible. Instead of being judged by generalizations, drivers today can use apps and devices that track their real behavior—speed, braking, mileage, and more—to earn discounts on car insurance. This shift is transforming how insurers price policies and how drivers think about saving money.

And here’s where Beem comes in. Beem is an AI-powered smart wallet app that helps you manage your financial life more intelligently, including making car insurance smarter and cheaper. In this guide, we’ll explore the topic telematics: how driving apps can save you money on car insurance, how driving apps track and reward behavior, the pros and cons of opting in, and how Beem makes the whole process simpler. 

What Is Telematics and How Does It Work?

The Basics of Telematics

Telematics is the combination of telecommunications and informatics. In plain terms, it’s the use of technology—usually apps on your phone or devices plugged into your car—to track driving behavior and vehicle usage. The data collected typically includes:

• Speed and acceleration patterns.
• Hard braking or sharp cornering.
• Time of day you drive (late-night driving is often riskier).
• Mileage and frequency of trips.
• Phone use while driving.

Insurers use this data to evaluate how risky you are behind the wheel. Safe, consistent, low-mileage drivers are rewarded with lower premiums, while riskier drivers may not qualify for savings.

How Insurers Use Telematics Data

Telematics allows insurers to price policies more fairly. Instead of assuming that all young drivers are high risk, insurers can say: This 22-year-old has excellent driving habits, so they deserve a lower premium. Discounts can range from 10% to 40%, depending on the program and driving behavior.

Telematics Devices vs. Smartphone Apps

There are generally two ways telematics works:

1. Plug-in devices: A small device plugs into your car’s OBD-II port (usually under the dashboard) and collects data directly from the vehicle.
2. Smartphone apps: These use your phone’s GPS and sensors to track driving. They’re more convenient but depend on your phone being in the car.

Apps are becoming the dominant choice because they’re easy to install and manage, but both methods offer similar savings potential.

Why Telematics Is Changing Car Insurance in the US

From Demographics to Behavior-Based Pricing

Traditionally, insurers priced policies using group data. Young male drivers? Higher rates. Urban drivers? Higher rates. You were lumped into a high-risk group even if you were a safe, cautious driver. Telematics flips the model. Instead of judging you by averages, it evaluates your individual behavior. If you brake smoothly, avoid distractions, and limit mileage, you can prove you’re lower risk—and your premiums will reflect it.

Encouraging Safer Driving Habits

Driving apps do more than save money—they improve safety. Many apps provide real-time feedback, like alerting you if you brake too hard or drive too fast. Over time, drivers often adjust their habits, which reduces accidents and keeps roads safer for everyone.

Growing Popularity Among US Insurers

Major insurers like Progressive, State Farm, and Allstate already have telematics programs. Millions of drivers are enrolled, and adoption keeps growing as people look for ways to cut costs. In 2025, with premiums rising in most states, telematics will become one of the most practical strategies for saving.

How Driving Apps Help You Save Money

Mileage-Based Discounts

One of the simplest ways telematics saves money is by tracking mileage. If you drive less than average—say, under 7,500 miles a year—you’re less likely to be in an accident. Mileage-based programs adjust your premiums accordingly. For retirees, remote workers, or city dwellers who don’t drive much, this can lead to hundreds of dollars in savings annually.

Safe Driving Score Discounts

Apps assign you a score based on behaviors like speeding, braking, cornering, and phone use. The higher your score, the bigger your discount. This rewards cautious drivers and helps offset blanket assumptions based on age or zip code.

Real-Time Feedback = Safer Choices

Telematics apps don’t just collect data—they often coach you. The app notifies you if you’re braking too hard or accelerating too aggressively. Over time, this feedback makes you a safer driver, further reinforcing your discount eligibility.

Custom Premiums Instead of Blanket Pricing

Telematics makes car insurance more personalized. Instead of paying what everyone else in your demographic pays, you pay based on you. That means you’ll never have to subsidize risky drivers in your age group or city if you drive safely.

Advantages of Telematics-Based Car Insurance

Savings Potential

The headline advantage: discounts. Depending on your habits, you could save 10%–40% on premiums. For a family paying $2,000 annually, that’s up to $800 in savings.

Fairer Pricing

Telematics makes pricing more equitable. A safe teen driver can prove their skills and earn a lower premium, while an older driver with risky habits may not qualify.

Safer Roads

Feedback from apps helps drivers improve. Studies show that drivers enrolled in telematics programs often reduce risky behaviors, leading to fewer accidents overall.

Flexibility for Different Drivers

• Occasional drivers: Pay less because you drive less.
• Parents: Monitor teen driving and ensure safe habits.
• Frequent commuters: Still save if your driving behavior is consistent and safe.

Concerns and Limitations of Telematics

Privacy and Data Security

Many drivers’ biggest concern is who sees their data. Telematics apps track sensitive information like location and driving patterns. Reputable programs anonymize or secure this data, but reviewing privacy policies is important.

Inconsistent Savings

Not everyone qualifies for big discounts. Aggressive drivers or those with long commutes may see little to no savings. Some may even face higher renewal rates if their driving is riskier than average.

Program Differences by Insurer

Not all telematics programs are created equal. Some insurers cap discounts, others offer more generous savings. That’s why comparing programs matters.

How Beem Helps You Unlock Telematics Savings

Here’s where Beem makes the process easier.

Smarter Comparisons

Beem, an AI-powered smart wallet app, lets you see which insurers offer the best telematics programs in your area. Instead of manually researching each provider, Beem brings them to you in one place.

Personalized Recommendations

Beem uses your profile to identify where telematics can save you the most. Whether you’re a low-mileage driver, a safe driver, or both, Beem helps connect you to the programs that actually fit your lifestyle.

Easy Access to Discounts

By surfacing hidden discounts and usage-based programs, Beem ensures you never leave money on the table. You keep the coverage you need, but you pay less for it.

Real-Life Examples of Telematics Savings

• Case 1: Young driver in Illinois – Alex, age 21, joined a telematics program through Beem and saved 25% on premiums after proving safe driving habits.
• Case 2: Remote worker in Texas – Maria, who drives only 5,000 miles a year, saved $900 annually by switching to a mileage-based plan found via Beem.
• Case 3: Parent in Florida—John enrolled his teenage daughter in a telematics program through Beem. She developed safer habits, and the family qualified for discounts across their multi-car policy.

Mistakes to Avoid With Telematics

• Not understanding how you’re being tracked: Always read program details before opting in.
• Driving aggressively during tracking: Enrollment periods often determine discounts, so safe driving is essential.
• Forgetting to compare options: Discounts vary widely by insurer. Using Beem helps ensure you’re in the program that benefits you most.

Conclusion

Telematics is transforming how car insurance works in the US. Focusing on actual behavior instead of demographics creates fairer pricing, safer roads, and real savings. Drivers who are cautious, consistent, or low-mileage stand to benefit the most. With Beem, those savings are easier to access than ever. It connects you to insurers offering telematics programs, surfaces hidden discounts, and ensures your coverage stays extensive while your premiums shrink.

For those eager to explore their options further, Beem, the personal finance app trusted by over 5 million Americans, provides a convenient platform to compare car insurance quotes and discover affordable rates tailored to individual needs. You can take the first step towards securing reliable coverage today with Beem.  Download the app here.

FAQs on Telematics: How Driving Apps Can Save You Money on Car Insurance