It’s one thing to say you’re a good driver; it’s another thing to prove it. That’s just what many of the top car insurance carriers are now allowing their customers the chance to do.

Usage-based auto insurance, as it’s often referred to, provides drivers the opportunity to use an app or install a device in their vehicle that monitors their driving habits over a period of time. An example of this is Progressive's Snapshot device that many car insurance consumers are now installing in their cars.

If consumers prove to be smart, safe drivers, then they may be eligible for a lower rate on their auto insurance. Many carriers even offer an initial discount just for signing up for the program. As always, it’s important to consult the auto insurance provider to see if they offer a program and find out the details.

How do Progressive's Snapshot or usage-based devices work?

The exact aspects of a consumer’s driving that insurance companies monitor varies by carrier, but generally speaking, insurance carriers are tracking a driver’s braking and acceleration habits, in addition to how much they drive and the time of day.

Some carriers require consumers to install an app on their smartphone that’s used to track driving habits, while other providers send a device that plugs into a consumer’s vehicle.

As expected, carriers reward drivers who don’t accelerate too quickly and who don’t brake too sharply. Drivers who don’t log many miles also stand a better chance of receiving a discount.

As for the time of day, auto providers are likely to reward drivers who rarely drive between midnight and 5 a.m., especially on the weekends. Avoiding rush hour commutes on a daily basis could also lead to discounts.

What if my car insurance company deems me a bad driver?

So, what happens if the policyholder signs up for a usage-based car insurance program, and it turns out what the insurance company constitutes as a good driver doesn’t match the driving skills of the consumer? Maybe the policyholder has a lead foot or a tendency to slam the brakes.

While most insurance carriers say installing the device or app can only result in discounts, some carriers do acknowledge that your rates could increase if the policyholder displays risky driving behavior. Be sure to check with the provider before signing up for the program.

Privacy concerns

The biggest concern among many users who are considering signing up for a usage-based program is what it means for their privacy. Drivers are, in a sense, inviting their insurance company to ride shotgun with them.

But the concerns extend far beyond simply showing the carrier their driving habits. The data collected includes information regarding where and when the policyholder drove. And given the recent prominence of hacking, consumers have voiced concerns about this location data being compromised by a third party.

Reading the carrier’s privacy statement and asking the insurance company questions about how your information is stored and shared is the best way to alleviate concerns regarding privacy.

For many years, a consumer’s premiums didn’t necessarily reflect their good driving habits. But the rise in usage-based car insurance now provides drivers a chance to save money for their safe practices on the road.

For a 2019 update on the Progressive Snapshot program, read our Progressive Snapshot review. We analyzed nearly 400 reviews from drivers who've used the program to determine if drivers actually save money on their car insurance while using it.

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