# Telematics

> Telematics in car insurance defined: how apps, plug-in devices and connected cars track driving for usage-based pricing, and the privacy trade-offs.

Canonical page: https://statecover-guide.com/glossary/telematics/  
Last reviewed: October 28, 2026 by the StateCover Guide editorial team  
General information, not legal or insurance advice.

## Quick answer

Telematics is technology that collects data about how a vehicle is driven and shares it with the insurer. Insurers use it for usage-based insurance (UBI), which ties part of your premium to your actual driving instead of relying only on traditional rating factors such as age and driving record.

## How it works

According to the NAIC, the data can come from a device plugged into the car, a car's built-in connected system or a smartphone app. Depending on the program, it may record:

- miles driven and the time of day,
- GPS location,
- rapid acceleration, hard braking and hard cornering,
- airbag deployment.

Programs come in several forms, including pay-as-you-drive, which focuses on mileage, and pay-how-you-drive, which focuses on driving behavior. The NAIC gives the example that a driver covering long distances at high speed would pay more than one making short trips at lower speeds.

## Trade-offs to weigh

- **Privacy.** Tracking has raised privacy concerns, and the NAIC notes that some states now require insurers to disclose tracking and limit the data they collect.
- **Price direction.** Safe, low-mileage driving can be rewarded, but recorded habits like hard braking can work against you. Ask whether the program can raise your rate or only lower it.
- **What is shared.** The amount of data depends on the technology and on how much you agree to share, so read the program terms before enrolling.

## Related terms

- [Rating factors](https://statecover-guide.com/glossary/rating-factors/)
- [Premium](https://statecover-guide.com/glossary/premium/)
- [Underwriting](https://statecover-guide.com/glossary/underwriting/)
- Guide: [Telematics car insurance](https://statecover-guide.com/costs/telematics/)

## Sources

- [NAIC, Telematics (insurance topic)](https://content.naic.org/insurance-topics/telematics) — what UBI is, devices, data collected, pricing and privacy rules
- [NAIC, Auto insurance consumer information](https://content.naic.org/consumer/auto-insurance.htm) — how telematics monitors driving and what data is collected