Usage-Based Insurance

Allstate Drivewise is a usage-based insurance program that tracks drivers with a mobile app and rewards them with rewards and a semi-annual rebate for safe driving habits. The Allstate Drivewise app tracks three main driving characteristics: safe speed (under 80 mph), braking (minimal abrupt stops) and time of day (limited late-night trips).

How Allstate Drivewise Works 

Allstate Drivewise works by tracking drivers' habits through the Allstate mobile app. Users do not have to take any action to log trips on the app. Your phone just needs to be charged to at least 25% and have location services enabled in order for your trip to be detected. Once you've traveled at least 20 mph for a short distance, the app will begin tracking you.

However, if you're a passenger in a moving vehicle and not the driver, you will have to either delete the trip from the app or put the app into “sleep” mode for the duration of your trip.

Drivewise does not affect premiums directly, instead offering cash rebates to drivers based on their performance. So if you practice unsafe driving habits while using Drivewise, your rates won't go up. But drivers who practice good habits can expect to earn lucrative rewards.

Allstate Drivewise Rewards

If you're a current Allstate customer, you can earn up to 10% of your premium in cash back rewards just for signing up. Depending on your driving habits, you can earn up to 25% cash back every six months by using the program.

Drivewise also allows users to earn Allstate Rewards points, which can be redeemed for daily deals, gift cards, sweepstakes, and more. Even if you're not an Allstate customer, you can still sign up for Drivewise in order to earn points. Drivers earn 10,000 points after signing up, and can earn bonus points for completing safe driving challenges such as going three consecutive days with no high speeds or sudden braking.

How to Sign Up For Allstate Drivewise

To sign up for Drivewise, the primary policyholder needs to download the Allstate mobile app on their smartphone and activate the program. Then, additional drivers on the policy who want to use Drivewise can download the app and enter an activation code.

Drivers who aren't Allstate customers can also create an account on the app in order to earn rewards.

Pay-as-you-go car insurance calculates a policyholder's premium based on how many miles they drive each month. The policyholder's mileage is tracked through a mobile app or device plugged into the vehicle, and customers who drive fewer miles pay a lower rate. Companies that offer pay-as-you-go car insurance, which can also be referred to as pay-per-mile or usage-based coverage, usually charge a monthly base rate and then add a fee for each mile driven.

Pay-as-You-Go Car Insurance Options

• Nationwide SmartMiles
• Allstate Milewise
• Metromile

Other major insurers offer usage-based programs that give drivers a discounted rate based on various driving habits, including miles driven. If your annual mileage is lower than the average driver, you may also qualify for a low-mileage discount.

Who Should Consider Pay-as-You-Go Car Insurance

Pay-as-you-go car insurance is often a good investment for people who don't drive frequently, like students and seasonal workers. To learn more, check out WalletHub's guide to usage-based insurance.

Geico started using telematics to monitor participating customers' driving habits electronically in 2019, when the company launched its DriveEasy program. Since then, Geico has expanded DiveEasy and its telematics program across 17 states and plans to offer access to more states in the near future.

Geico is testing the smartphone app in certain markets first because telematics programs are still pretty new to consumers. Only 10% to 15% of U.S. drivers had tried one, as of mid-2019.

How does the Geico telematics app work?

The Geico telematics app, DriveEasy, automatically detects when you're driving without you having to open and close the app during trips. DriveEasy provides feedback on your driving and scores your habits to determine your discount. Currently, the app monitors:

• Distracted driving
• Hard braking
• Time of day
• Miles logged

Some of these behaviors impact your score more than others. Distracted driving and total driving distance are given the most weight since they are the most likely to increase your risk of an accident. Although the app logs both handheld phone calls and active phone use, it won't penalize you for hands-free calls or mounting your phone on the dashboard to use the GPS.

The app can tell if you're the driver or passenger by using your phone's sensors and GPS location, so you won't have other people's driving habits affecting your score. If DriveEasy incorrectly makes you a driver on a trip, you are able to correct it.

How much is the Geico DriveEasy discount?

Geico guarantees you'll get the full discount just for participating, which could be as much as 20%. How much you'll save for trying the app depends on your location. Feedback from the DriveEasy app won't be used to increase your premiums, but your discount may be reduced based on your score. The user agreement does say that Geico can use information from the app as part of its investigation of a claim, though.

States Where Geico's DriveEasy Program is Available

Usage-based insurance from Geico benefits safe drivers who drive less than the average person (roughly 12,000 miles per year), but only Geico customers in Pennsylvania and Connecticut can sign up for the program right now. More states will get access soon. All eligible drivers should consider giving it a try, though. Geico offers a discount of up to 20% simply for participating, depending on where you live.

Geico's usage-based insurance relies on a smartphone app called DriveEasy, which automatically detects your driving—you don't even have to open and close the program. DriveEasy gives feedback on your driving and scores your habits to determine your discount. Geico guarantees you'll get the full discount for participating the first term. After that, feedback from the DriveEasy app won't be used to increase your premiums, but your discount may be reduced based on your score.

Geico's DriveEasy app monitors:

• Distracted driving
• Hard braking
• Time of day
• Distance driven

Some of the habits and behaviors that DriveEasy tracks will impact your safe-driver score and discount potential more than others. Distracted driving and total distance driven are given the most weight. The app logs both handheld phone calls and active phone use, but it won't penalize you for hands-free calls or mounting your phone on the dashboard to use the GPS.

A telematics box collects and analyzes driving behavior, including real-time location and performance data, for the purpose of calculating auto insurance premiums. Sometimes called a car's “black box,” a telematics box is a small electronic device fitted to a vehicle, usually behind the dashboard.

Telematics black boxes should not be confused with event data recorders (EDRs), which are also called “black boxes,” or smartphone apps that collect telematics data for usage-based insurance. Telematics black boxes provide a continuous stream of real-time data to your insurance company, while EDRs only note the conditions of your car in the few moments before, during, and after an accident. When it comes to smartphone apps that record telematics data, they often capture information similar to what a black box records, but they aren't fixed to your car like a black box, and they can't monitor as many things, like your fuel level or whether your airbags were deployed.

How Does a Telematics Box Work?

A telematics box works by using computer software and telecommunication technology to measure and analyze various aspects of your driving habits, including how you drive, when you drive, and where you drive. Basically, whenever your car's engine is running, the telematics box is gathering information about your speed and acceleration, braking and cornering habits, mileage, fuel level, real-time location and more, depending on the device.

To accomplish these tasks, telematics boxes generally use a Global Positioning System (GPS) system to track your driving routes and an accelerometer (motion sensor) to collect information about heavy braking habits, when you're speeding, and any impacts to the car. The telematics box then transmits that data to a secure server via the mobile internet using a SIM card.

What a Telematics Box Records

• Times you drive
• Speed you drive
• Hard braking
• Sharp accelerations
• Daily mileage
• How often you take breaks on long trips

Insurance companies use data collected by telematics boxes to help calculate accurate premiums based on how much of a risk you pose as a driver, as well as to gain insight into what happened during an accident when processing an auto claim.

Some telematics boxes will also alert an insurance company if there's a particularly strong impact from an accident. And thanks to their built-in GPS system, telematics boxes can often be used to help find vehicles when they're stolen. However, telematics boxes don't have any control over your car, so they can't affect your speed, brakes or electrical system.

Telematics insurance is a type of car insurance that bases your insurance rate on how far and how safely you drive. Insurance companies use telematics to track your driving distances and behavior, and then use that data to assess how much risk the way you drive might pose. This risk assessment is then used to calculate your insurance premium.

Your insurance company will provide you a “black box” device that attaches to your car, or an app that you can download to your phone. Both the device and the app then track your driving behavior – including speed, breaking and acceleration, among other factors. The black box device has a SIM card that records your driving information and sends that data back to the insurance company. The phone app uses your car's GPS capabilities to record data on your driving behavior and sends it back to your insurer.

The company then uses this data to analyze how safe your driving behavior is and calculates your insurance premium accordingly. The safer and less you drive, the more you save.

Yes, your insurance can go up with a black box telematics system in many cases, though some insurers only use telematics to calculate a discount. Usually, car insurance premiums can go up if the black box shows that you regularly exhibit risky driving habits, like speeding, or if it shows you are responsible for an accident.

How Black Boxes Affect Insurance Rates

Insurance companies that offer black box telematics programs use the devices to collect data about how a customer is driving, when they're driving, and where they're driving. In a few cases, such as with Nationwide and Allstate, the insurance company will only use this information to calculate discounts for customers who drive safely, leaving rates unchanged for other drivers.

In contrast, other car insurance companies use the data to calculate a customer's insurance rate, which could lead to a premium increase, decrease or no change, depending on how the driver performs. For example, Progressive states that 20% of drivers participating in its Snapshot telematics program see a rate increase.

Event Data Recorder “EDR” Black Boxes

Your insurance can also go up if the event data recorder (EDR) – often called a “black box” – in your vehicle shows that poor driving contributed to you causing an accident. EDR black boxes are recording devices constructed of crash-resistant material that record the moments leading up to, during, and immediately after an accident, to help investigators determine exactly what happened. While black boxes are most often associated with airplanes, they are now standard equipment in most modern vehicles as well.

Depending on the state, your insurance provider may already meet the qualifications to access the data in your vehicle's EDR black box, or it could get a court order to obtain it if you object. So, if you have an accident and your insurance provider finds information in your car's black box that reflects poorly on your driving habits, your insurer may consider you a higher risk, and your insurance premium could go up when it's time to renew your policy.

It's important to remember that while your car insurance rate can go up with a black box if it shows you're a risky driver, it can also go down if it shows you're being a safe driver. The best ways to make sure your car insurance bill doesn't rise because of what's on the black box are to drive safely and to monitor the data it's sending the insurance company yourself, which you can typically do online or through a mobile app.

A black box can detect a driver's speed, location, acceleration, braking, cornering, daily mileage and other driving habits. Car insurance companies use the information black boxes detect to determine premiums and discounts for drivers participating in telematics insurance programs, also called usage-based insurance.

A Black Box Can Detect:

• Speed
• Location
• Driving times
• Braking habits
• Cornering habits
• Acceleration habits
• Daily mileage

Different insurance companies will use the data collected by black boxes for different reasons, however. For instance, some insurance companies use the data detected by black boxes to calculate either a rate increase or a discount for customers, based on how safe or risky their driving habits are. Other companies won't punish bad drivers, using black box data only as a source of potential discounts.

Finally, it's important to note that a black box telematics device is different from an event data recorder (EDR), which is also called a “black box.” EDR black boxes are crash-resistant devices that record data points about the moments before, during, and after an accident – like a vehicle's speed, brake application and throttle position, as well as if seat belts were in use, if airbags were deployed and other variables. These devices are only meant to be used by law enforcement and insurance companies to extract data about a crash, and are not something the average driver would access.