Usage-based insurance sounds great: share driving data, snag a discount. Yet the same tracking that rewards safe habits can also quietly nudge premiums higher.

Many drivers don’t realize how much information their vehicle and apps collect—or how that data moves between automakers, brokers, and insurers. Here’s what to know and how to regain control.

What Changes

Traditional pricing leans on age, location, vehicle, credit, and past violations. Telematics adds a live feed: speed, hard braking, phone distraction, nighttime driving, cornering, and total miles. Safer patterns can earn 10%–40% discounts. Risky patterns can reduce or eliminate savings—sometimes even lead to surcharges. Always confirm whether your program is “discount-only” or can also raise rates.

How It Works

Insurers measure behavior via either a mobile app or a plug-in OBD-II device. Apps use your phone’s satellite navigation system and motion sensors; devices read vehicle signals directly. Some programs run for an initial “evaluation window” (e.g., 60–90 days), then stop. Others track continuously and adjust at renewal. Your results may also follow you to a new policy if data is shared broadly.

The Data

Beyond obvious items like acceleration and braking, many programs infer trip purpose, route risk, and phone handling. Connected cars add more: location pings, ignition cycles, odometer, and event logs. Data often flows through third-party analytics platforms, which can build a comprehensive driver profile. That profile may later inform underwriting, pricing, or claims triage.

Privacy Gaps

Consent isn’t always as clear as it should be. You might opt into a vehicle app for remote start but also enable “driving insights” by default. Some connected-car services share logs with data brokers who, in turn, provide reports to insurers. State privacy rules vary, and disclosures can be dense. The result: information you never meant to share shaping what you pay.

Douglas Heller, an insurance expert, writes, “Effective oversight and regulation are needed to ensure the programs benefit consumers and are not misused.”

Protect Yourself

Treat driving data like a credit score—monitor it, correct errors, and limit unnecessary sharing. Four moves matter most: review your consumer reports, read program terms carefully, audit app and car settings, and escalate complaints when needed. Done together, these steps can lower costs and shrink your data footprint without giving up valuable coverage.

Check Your Files

Request your auto CLUE report and any driver telematics files held by consumer-reporting agencies. You’re entitled to one free copy every 12 months. Verify claim history, mileage, and behavioral entries. Dispute inaccuracies and consider a security freeze if a brokered report is being used in ways you don’t want. Keep confirmation letters for your records.

Scrutinize Terms

Before enrolling, read the telematics agreement—not just the marketing page. Look for: what is collected, how long it’s retained, who it’s shared with, whether data affects renewals, and whether the program is “discount-only.” Check if trips as a passenger count against you and how disputes are handled. If provisions allow broad resale or indefinite retention, think twice.

Audit Your Apps

On your phone, review location, motion/activity, Bluetooth, and background refresh permissions for insurer and automaker apps. Set location to “While Using” when possible. Turn off “driving behavior” toggles inside connected-car apps. If you join a telematics program, keep the app on a single device and enable trip classification to avoid mislabeling rides as the driver.

Tighten Car Settings

In the vehicle’s infotainment menus, disable data sharing you don’t need (diagnostics, usage analytics, marketing). Unlink third-party services you don’t use. If a plug-in device is required, confirm what it collects and how to return it when you leave the program. Remove devices promptly at cancellation to stop ongoing data flow.

Optimize for Savings

If you’re comfortable sharing, maximize the upside. Avoid late-night trips, maintain longer following distance to reduce hard brakes, and silence notifications while driving. Many apps include coaching; use it to lift your score quickly during the initial measurement window. Re-quote your policy after improvements—some carriers allow a midterm discount update.

Mind the Deductibles

Telematics discounts stack with other price levers. Pair safer-driving savings with a smart deductible strategy and bundling to compound benefits. Just ensure your emergency fund can cover the higher out-of-pocket if you raise deductibles. A practical rule: keep at least one full deductible set aside before opting for higher levels.

Switch Strategically

If your score disappoints—or the data sharing feels too broad—shop alternatives. Ask each insurer whether their program is optional, how long data is kept after exit, and whether results transfer to affiliates. Get a non-telematics quote alongside any usage-based option for a clean comparison. Bind new coverage before canceling to avoid lapses.

Escalate Complaints

If data was collected or used without clear consent, file with your state insurance department via the NAIC consumer portal. You can also submit privacy complaints to the FTC. If adverse pricing used a consumer report, you’re entitled to an “adverse action” notice and the right to dispute the underlying data. Keep written timelines and copies of all correspondence.

Conclusion

Telematics can cut premiums and coach safer habits—if you understand the tradeoffs. The key is informed consent: know what’s tracked, how it’s shared, and how long it lasts. Start by pulling your reports, tightening app and car settings, and choosing programs with clear, discount-only rules. Choose the balance of savings and privacy that fits your comfort level, and document your settings and approvals as you go.