Why Car Insurance Companies Are Now Tracking Your Driving Habits — And What You Can Do About It
Your car insurer knows where you were at midnight. They know you braked hard twice this week. And you probably agreed to it without realising. Millions of drivers are being silently monitored right now. Here’s exactly what’s being tracked — and how to stop it.
Your car insurance company may know more about you than your own family does.
How hard you braked at that red light on Tuesday morning. The highway you took at 11:47 PM last Friday. The exact speed you hit on the expressway near your office. Even how sharply you took that corner near the market.
This is not science fiction. This is telematics-based insurance — and it is already reshaping how millions of drivers across India, the US, the UK, and beyond pay for their car insurance.
If you have never heard of this, you need to read this right now. Because whether you know it or not, your insurer might already be watching.
What Is Telematics — And Why Should You Care?
Telematics is the technology that combines telecommunications and informatics to monitor vehicle behaviour in real time. In simple terms, it is a system that records how you drive — your speed, acceleration, braking patterns, cornering, mileage, and even the time of day you are on the road — and sends that data directly to your insurance company.
This data is collected through:
- OBD-II dongles plugged into your car’s diagnostic port
- Smartphone apps using your phone’s GPS and accelerometer
- Factory-installed telematics systems built into newer vehicles
- Black box devices hardwired by the insurer’s technician
The insurance industry calls this Usage-Based Insurance (UBI) or Pay-How-You-Drive (PHYD). The concept sounds fair on the surface: if you are a safe driver, you pay less. If you drive recklessly, you pay more. But the reality is far more complicated — and potentially far more invasive.
Why Are Insurers So Desperate to Track You?
Insurance has always been a game of risk assessment. For decades, companies used broad demographic factors to price your premium — your age, gender, location, car model, and claims history. A young male in Mumbai would pay more than a middle-aged woman in Pune, regardless of how either of them actually drove.
That model is changing fast, and here is why:
1. Traditional Risk Models Are Losing Accuracy
Demographic-based pricing is increasingly being challenged by regulators globally. The EU has banned gender-based pricing. India’s IRDAI has been pushing for more transparent pricing methodologies. Insurers needed a new, defensible way to differentiate risk — and telematics gave them exactly that.
2. The Data Is Incredibly Profitable
When an insurer tracks your driving, they are not just calculating your premium. They are building an extraordinarily detailed profile of your behaviour, routines, and lifestyle. This data has value far beyond insurance underwriting. It can inform product development, marketing partnerships, and even be sold (in anonymised form) to urban planners, automobile manufacturers, and fleet management companies.
3. Fraud Detection Becomes Surgical
Staged accidents and exaggerated claims cost the insurance industry billions every year. Telematics data can reconstruct exactly what happened in the seconds before and after an incident — making fraudulent claims far harder to sustain.
4. Competitive Pressure Is Accelerating Adoption
In India, players like Acko, Go Digit, and Bajaj Allianz have begun experimenting with telematics and app-based monitoring. Globally, Progressive’s Snapshot programme in the US has enrolled over 28 million drivers. When one player offers lower premiums for good driving, every competitor is forced to follow. This creates a race to monitor, whether customers want it or not.
What Data Are They Actually Collecting?
This is where most people are shocked by the scope. Here is a breakdown of what modern telematics systems can capture:
| Data Point | What It Reveals |
| Speeding events | Risk tolerance and aggression level |
| Hard braking frequency | Reaction time and following distance |
| Rapid acceleration | Aggressive driving style |
| Cornering force | How controlled your turns are |
| Time of driving | Night driving = higher risk weighting |
| Mileage driven | Total exposure to road risk |
| Phone usage while driving | Distraction behaviour |
| Location data | High-risk zones, toll roads, highway usage |
Some advanced programmes also flag fatigue indicators — extended driving without breaks — and parking location, which can reveal where you live, work, or spend your time regularly.
Let that sink in.
The Hidden Risks Nobody Talks About
Your Data Can Be Used Against You in a Claim
Here is a scenario that is already playing out in multiple countries. A driver has an accident and files a claim. The insurer reviews telematics data from the past 30 days. They find three instances of speeding and five hard-braking events. They use this to argue that the driver was a habitually risky driver and reduce the claim payout — or deny it altogether.
The data you consented to share to get a discount is now being used to minimise your claim.
Opt-In Today, Mandatory Tomorrow
Several markets have already seen telematics programmes shift from optional to effectively mandatory. When non-monitored drivers are charged significantly higher base premiums, choosing not to participate becomes financially punishing. The opt-in eventually becomes the only realistic choice for middle-income policyholders.
Third-Party Data Sharing Is Largely Unregulated
In India, the Personal Data Protection Act (now the Digital Personal Data Protection Act, 2023) provides some safeguards, but insurance telematics sits in a grey zone. Most policy documents include consent clauses that authorise data sharing with "affiliates, partners, and service providers" — language broad enough to cover a vast range of third parties.
Cybersecurity Vulnerabilities
Your vehicle's OBD-II port is a gateway to the car's entire computer system. Poorly secured telematics dongles have been demonstrated to be hackable, potentially allowing remote manipulation of vehicle systems. This is not a theoretical risk — security researchers have proven it in live demonstrations.
What You Can Actually Do About It
This is the part most articles skip. Here is your practical action plan:
Step 1: Read Your Policy Documents — Really Read Them
Before agreeing to any telematics programme, look for the following in your policy document:
- What specific data points are collected
- How long data is retained
- Who the data is shared with
- Whether data can be used against you in a claims context
- What happens to your data if you cancel the policy
If these answers are not clear, ask your insurer in writing before signing up.
Step 2: Calculate Whether the Discount Is Worth It
Telematics discounts typically range from 5% to 30% on premiums. For an annual premium of ₹15,000, a 20% discount saves you ₹3,000. Ask yourself: is ₹3,000 worth giving an insurance company continuous access to your location, driving patterns, and behavioural data for a year? That is a personal decision, but it should be a conscious one.
Step 3: Know Your Rights Under the DPDP Act 2023
India's Digital Personal Data Protection Act grants you the right to:
- Access what personal data an organisation holds about you
- Correct inaccurate data
- Erase your data (subject to legitimate retention requirements)
- Nominate a representative for data-related matters
If your insurer is collecting telematics data, you can formally request a summary of all data collected. Do this annually at minimum.
Step 4: Consider Usage-Based Alternatives Selectively
Not all telematics programmes are equal. Some insurers offer Pay-Per-Mile products that only track total distance — not behaviour. If you are a low-mileage driver, this can offer genuine savings with minimal behavioural surveillance. Ask your insurer if a mileage-only option exists before agreeing to full behavioural monitoring.
Step 5: Opt Out — And Document That You Did
If you decide against telematics, opt out formally in writing (email is sufficient, but keep a copy). Verbal opt-outs are often not recorded accurately. If your insurer penalises you with a higher base premium for not participating, compare the market — competitors may offer competitive rates without monitoring requirements.
Step 6: If You Do Opt In, Drive Accordingly
If the discount is compelling and you decide to participate, understand the scoring system your insurer uses. Most programmes score hardest on:
- Late night driving (10 PM – 4 AM)
- Speeding above set thresholds
- Hard braking frequency
Adjusting just these three behaviours can dramatically improve your telematics score during the initial assessment period, locking in a better premium tier.
Informed Consent Is Everything
Telematics-based insurance is not inherently evil. Used transparently, it genuinely rewards safe drivers and makes the roads marginally safer. The problem is the gap between what insurers communicate at the point of sale and the full implications of what policyholders are agreeing to.
The driver who signs up for a 15% discount on their car insurance is also, often unknowingly, signing up to have their daily movements, driving aggression, sleep schedule (inferred from driving times), and behavioural risk profile continuously analysed by a for-profit company.
That is a transaction worth understanding before you agree to it.
The insurance industry will continue moving in this direction — the economics are simply too compelling for them to stop. Your job, as a policyholder, is to engage with these products as an informed adult: reading the fine print, exercising your data rights, and making deliberate choices rather than passive ones.
Your driving record belongs to you. Make sure you decide who else gets to see it.
Disclaimer: This article is for informational purposes only and does not constitute financial or legal advice. Insurance regulations vary by jurisdiction. Always consult a licensed insurance advisor for decisions specific to your situation.
