Black box insurance: what does usage-based insurance actually track?

What is usage-based (black box) insurance?

Usage-based insurance, often called telematics insurance or, in the UK, black box insurance, is auto insurance that uses data about how, how much and when you drive to set part of the premium. Traditional pricing relies on factors such as your driving record, a credit-based insurance score, the type of vehicle and where it is garaged, as the NAIC explains. Usage-based insurance adds your measured driving on top of those factors rather than replacing them. The programmes, regulators and figures in this article are American.

Usage-based insurance comes in two broad forms. Pay-as-you-drive (PAYD) prices the policy mainly on how much the vehicle is driven, so it is close to a per-mile policy. Pay-how-you-drive (PHYD) adds sensors such as accelerometers to judge driving behaviour as well as distance, according to the Wikipedia entry on usage-based insurance.

What does usage-based insurance track?

Usage-based insurance programmes track a short list of signals that regulators publish openly. The NAIC and Washington's Office of the Insurance Commissioner both name miles driven, time of day, where the vehicle is driven, rapid acceleration, hard braking, hard cornering and airbag deployment. The NAIC adds mobile phone use, and State Farm says its programme also watches speed. Each programme combines these differently, and none publishes its full scoring formula.

Hard braking, rapid acceleration and cornering are all forces a phone can measure with its accelerometer, gyroscope and GPS. The article on how a phone measures braking and cornering forces explains what those sensors see and why a roundabout is not a sharp corner.

Sources: NAIC (updated March 2025), Washington OIC, State Farm, opened November 2026.

How does your insurer collect the data?

Insurers collect usage-based insurance data in four ways. A smartphone app records trips with the phone's own sensors. A small device plugged into the car's diagnostic port reads the drive directly; Progressive says driving is typically measured with either a plug-in device or a mobile app. A Bluetooth beacon stuck to the windshield ties the phone to one car, which is how State Farm's Drive Safe & Save works. Finally, embedded technology in a connected car can send data without any app at all.

The collection method decides how much the insurer sees. An app sees phone handling, because it runs on the phone. A plug-in device sees only the car. Connected-car data is the least visible to the driver: it is collected by the car maker's own services, sometimes under terms accepted at the dealership, which is how the GM and OnStar case described below began.

How much can black box car insurance save?

Black box car insurance saves money for drivers whose habits look low-risk, and regulators stop there. Neither the NAIC nor Washington's insurance commissioner publishes a percentage. Both say short, slow driving will probably cost less than long, high-speed driving, Washington adds daytime driving to that profile, and both say not every driver will qualify for a discount.

The figures that exist come from insurers about their own programmes. Progressive's $328 is an average across drivers who saved, not across everyone who enroled. State Farm's 30% is an advertised figure that varies by state, on top of a 10% discount for signing up, and the discount is recalculated at each renewal. Read both as the best case, and compare them with what each mile costs you in fuel and wear.

Sources: Progressive (updated August 15, 2023) and State Farm (opened November 2026). Neither programme is offered in California.

Can usage-based insurance raise your rates?

Yes, usage-based insurance can raise your rates, and every insurer and regulator page opened for this article says so. The NAIC warns that it "can also lead to higher premiums" despite advertising built on discounts. Washington's insurance commissioner says premiums may go up or down depending on your driving behaviour.

The insurers say the same about their own programmes. Progressive writes that a rate could increase as a result of high-risk driving. State Farm says premiums may increase or decrease at each renewal, and that a driver with a low-mileage discount who drives more than 7,500 miles a year for personal use may see the premium rise.

What happens to your driving data?

Your usage-based insurance data goes to the insurer, and what happens next depends on its terms. Regulators flag two things to check first. The NAIC says to make sure you trust the insurer with your information, and Washington's commissioner suggests asking whether you can decide if device data is used after an accident. State Farm states on its programme page that it does not sell your information.

Data collected by the car itself has already left drivers' hands. GM and OnStar collected precise location and driving behaviour and sold it to the data brokers LexisNexis and Verisk, TechCrunch reported; GM ended its Smart Driver programme in April 2024. A consumer reporting agency is a company that compiles files on people for decisions such as insurance pricing.

The Federal Trade Commission finalised its order against GM and OnStar on January 14, 2026, according to Parker Poe. For five years GM may not share covered driver data with consumer reporting agencies, it must get separate, explicit consent for each feature that collects that data, and it must let consumers request a copy of their data or its deletion. Some terms run for 20 years.

Is usage-based insurance available in every state?

Usage-based insurance is not offered the same way in every state, and California is the clearest exception. The California Code of Regulations, section 2632.5, lets an insurer use a technological device only to determine actual miles driven, forbids collecting or storing the vehicle's location outside emergency, theft, map and travel services, and keeps the device voluntary. Behavior-based scoring has no place in that rule.

Availability also varies by insurer. Progressive notes that Snapshot is not available in California, and State Farm lists Drive Safe & Save as unavailable in California and Rhode Island. Before comparing quotes, check that the programme exists in your state and for your type of vehicle.

What are the advantages of black box insurance, and the downsides?

The advantages of black box insurance and its downsides come from the same fact: the premium follows your measured driving. A driver with low mileage, little night driving and smooth stops is rewarded. A driver who brakes hard in heavy traffic or works late shifts may not be, whatever their crash record says.

• Advantage: a lower premium for low-risk habits. Insurers advertise discounts for drivers who drive less, at safer times and smoothly; State Farm's ceiling is 30%.
• Advantage: feedback on how you drive. Programmes report hard braking, acceleration and speeding events, which some drivers use to change habits.
• Advantage: faster help after a crash. The NAIC notes that real-time tracking may speed up accident response.
• Downside: the premium can rise. Progressive, State Farm, the NAIC and Washington's commissioner all say rates can go up.
• Downside: privacy. Location and driving behaviour are personal data, and the GM and OnStar case shows connected-car data can reach data brokers.
• Downside: not everyone qualifies. Regulators say not every driver will meet an insurer's standard for a discount.

How can you check your own driving before you enrol?

You can check your own driving before enroling by recording it yourself for two weeks and looking at the same signals an insurer would. Count your monthly miles, note how often you drive late at night, and look at how many hard stops and sharp accelerations each trip contains. Your counts will not match any insurer's thresholds, but the trend tells you whether a behaviour-based programme is likely to help you or cost you.

WrenchTime, an iPhone app for car and motorcycle logs, records trips automatically and counts braking, acceleration and cornering events on each one, with peak G-force. The trips stay on your phone and in your own iCloud: the app has no account, scores nobody and sends nothing to an insurer. The guide to automatic mileage tracking explains how detection starts without a tap.

• The first few days. Turn on automatic trip recording and drive as you normally do, without trying to drive better for the test.
• End of week one. Look at the total distance and multiply by four for a rough monthly figure; note any trips that started late at night.
• During week two. Open each trip and note the hard braking and acceleration counts, and which routes produce most of them.
• End of week two. Ask the insurer Washington's questions: what exactly is monitored, what you could save, and whether you control how the data is used after an accident.

See your own braking and acceleration on your iPhone

Record a few weeks of driving with WrenchTime before you decide on a usage-based policy. Trips start on their own when your phone connects to the car or detects driving, and each one keeps its distance, speeds and counted braking, acceleration and cornering events. The free version covers 1 vehicle and 10 recorded trips a week; the guide to automatic mileage tracking shows how it works.