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Insurance Drive Apps

Can an App Help You Save on Car Insurance?

Car insurance companies offer a dizzying array of discounts for everything from a clean driving history to owning a home or having good grades. Their goal is to give drivers the most competitive rate possible in a crowded marketplace, while keeping their risk level manageable to remain profitable.

Risks vs. Rates

A risky driver is more likely to file a claim and will cost the insurance company more to insure. That’s why insurers have become skilled at evaluating how risky a given driver is through years of collecting and analyzing driver-related data. They know which characteristics make a driver more likely to file a claim and which mark a safer driver. Insurers then can maximize profits by offering low-risk drivers an attractive rate and targeted discounts, and charging high-risk drivers more to protect against losses.

Yet, prediction is inherently imperfect. That’s why insurance companies have been using a type of data collection that enables them to understand driver behavior more accurately and set pricing more precisely: user-based insurance. Instead of predicting how a driver will behave, UBI allows the insurer to monitor the actual behaviors of a single user and customize their premium price accordingly.

Usage-based insurance is most often accomplished via a drive app — a smartphone application that records a user’s driving data. This data is then fed back to the insurance company, which uses it to determine the driver’s insurance rate and discounts. In addition, there are devices that can be installed directly into your vehicle in lieu of a phone app, and they function similarly.

Drive apps seem like a win-win proposition: insurance companies can identify low-risk drivers more easily, and consumers can enjoy significant discounts on their premiums as a reward for good driving. But as with any new technology, there are pros and cons.

How it Works

Despite the high-tech underpinnings of drive apps, how they function on the surface is easy to understand. After signing up with your insurance company, you’ll be directed to download its specific drive app. Once installed, the app begins to collect data about your driving habits. Using the accelerometer, gyroscope and GPS sensors inside your smartphone, the app can determine when you are driving and record your acceleration and deceleration, speed, distance driven, location and more.

The app and the sensors are advanced enough to differentiate between when you’re actively driving and when you’re on a bus or train, biking, or even a passenger. After a certain review period, which is usually around 90 days, your insurance company takes your recorded driving data and runs it through a complex algorithm, which determines your discount.

Which behaviors affect your discount? Negative factors include harsh braking, abrupt turns, speeding, late-night driving and high vehicle usage. Positive factors are basically the opposites: gradual braking and acceleration, low vehicle usage, obeying the speed limit and avoiding nighttime driving. If you’re generally a defensive driver, you should receive a hefty discount; if you’re an overly aggressive driver — and don’t plan on changing that — using a drive app probably won’t be beneficial.


The main advantage of signing up for a drive app program is the savings. Many insurance companies offer an immediate 5% discount on premiums simply for signing up, then provide an additional discount after your review period. This behavior-based discount can be significant, with most insurers touting savings of up to 20% — hundreds of dollars per year for many drivers. And this discount is usually in addition to the traditional insurance discounts you’re already receiving. In addition, many insurance companies won’t penalize you if the app records bad driving behaviors and your rate may not increase. Instead, your discount will be capped at 5% and won’t receive any extra savings. Keep in mind, this may be changing in the future.

Drive apps present an especially attractive opportunity for drivers with a recent history of accidents or speeding tickets. Whereas previously, there was no way to prove you had become a better driver — and your insurance premiums would skyrocket because of your spotty record — drive apps give you a chance to show you’ve changed. Although your driving record certainly will factor into your rate, the drive app discount is likely to soften the blow.

Another less obvious benefit of a drive app is the opportunity to improve your safe-driving habits and those of your family. In addition to sending your driving data to the insurance company, most drive apps also use this data to gamify the driving experience. You might gain points for safe driving behavior, or be given a “driving score” that you can compare with family members. There even may be achievements and awards to unlock within the app. What better way to promote safe driving than by turning it into a friendly competition?

If you have young drivers in the home, you can use a drive app to keep an eye on their driving habits without actually being in the car. Periodically reviewing their app data and driving scores are a great opportunity to start a conversation about how well they are driving and how they can improve.


Privacy concerns are the most talked about drawbacks of drive apps. If you’re someone who aims to live “off the grid” as much as possible, you might not be comfortable sharing your driving information. But if you own a smartphone, it’s likely that you already use apps that track your movement, including the most popular navigation apps. Allowing your insurance company access to this information doesn’t seem like it poses that much additional risk. It’s always possible that a hacker could gain access to the insurance company’s servers and steal your location data, but this information seems like a lower-interest, lower-value target compared to credit card or social security numbers.

And there’s one reason that your data might be safer with your insurance company than it is with most other apps: your state’s office of the insurance commissioner. This governmental body oversees all things insurance in an effort to “protect consumers and make sure that companies, agents and brokers follow the rules.” Part of that mission now includes reviewing drive apps to verify that they don’t use consumers’ data in unethical ways — only for specific insurance-related purposes.

Keep in mind, if you use a drive app and then change your mind, you can unregister from your drive app program and uninstall the app. Your old driving data won’t be passed on to future insurers nor added to your permanent driving record. Of course, each drive app is different, and you should review the terms and conditions provided by your specific insurance carrier.

There are some other, yet minor, downsides of drive apps as well. They can make it more difficult to price-shop among different insurance companies because you won’t know how much your actual discount is until after the review period. An app also will increase the usage of your phone’s battery power to a certain degree, although it is not more than common navigation apps. Finally, the data transmitted to your insurance company will count against your phone plan’s data limits, but each hour of driving only uses kilobytes of data — a very small amount compared to everyday uses like streaming a podcast.

The Future

Given the specific data that insurance companies can acquire and the significant discounts drivers can receive, it’s hard to imagine a future in which drive apps don’t become more prevalent in the insurance space. In addition, privacy concerns don’t seem to be slowing adoption of the technology.

With that in mind, it won’t be surprising that we will reach a point where drivers are required to use a drive app — or pay a higher rate if they elect to opt out. If this becomes a reality, it’s probably the case that the sooner you start using a drive app, the better; having a longer history of use and more accumulated driving data will likely help you secure a better rate should apps become the norm.

If a drive app sounds right for you, talk to your agent about your options. AAA Washington Insurance Agency currently partners with four insurance providers who offer drive app programs and discounts: SafeCo, Mapfre, Travelers and Progressive. Call (877) 222-4678 for a free, no-obligation consultation.

This article was last updated in December 2022.

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