A major trend we’ve seen among auto insurance companies lately is the use of telematics. This is when the insurance company tracks your driving habits in real-time, either through an app or a special device, and gives you discounts when you drive safely. Some telematics programs also track the number of miles you drive and charges you a per-mile rate. If your car insurance company offers this, you may be wondering if it’s an easy way to get affordable insurance. Here’s what you need to know about telematics-based insurance programs before you sign up.

Advantages of telematics-based car insurance

If you are a very safe driver who doesn’t speed or brake abruptly, you can get a very significant discount by using telematics. Most programs will give you a small discount just for signing up, and then increase your discount when your driving habits are good. In some cases, you can earn a discount as high as 20 percent. If you don’t drive often, you may also benefit from a distance-based telematics program. This is often the case for people who live in urban areas and can walk or take public transit around town.

Disadvantages of telematics-based car insurance

There are also some potential disadvantages of telematics-based car insurance to keep in mind. If you don’t have the best driving habits, this type of insurance can actually hurt you more than it helps. Some telematics programs will actually increase your insurance rates if they notice that you aren’t driving safely. Another thing to keep in mind is that telematics programs give your insurance company information about where you are driving. If you want to keep your information more private, it may be better to stick to a traditional insurance option.

Think carefully about the pros and cons of telematics insurance before signing up. In many cases, it can help you save money, but this isn’t true for everyone. One of the best ways to find cheap auto insurance is by going through a local agency, like EZ Insurance of Austin, Texas. We can help you find the best insurance policy for you, depending on your needs. Contact us today to learn more about the auto insurance policies we offer.