Your smartphone can tell how well you’re driving

Your official driving record tells insurance companies whether you’ve gotten any traffic tickets. But the ultimate tattletale could be your smartphone.
While insurance companies have been using plug-in telematics devices to track driving behavior for several years, smartphone apps promise to take it to the next level. Apps allow insurance companies to track driving behaviors without the consumer having to install an onboard telematics device.
New apps developed for insurers can detect when, where and how you drive. The technology captures data from the sensors and GPS in the phone, analyzes the information and produces a driving score. The results could affect your car insurance rates, depending on the insurer.
“We think of it as the Fitbit for driving,” says Kevin Farrell, president of Censio in Boston, which developed a mobile app for Progressive Insurance’s Snapshot program.
What can apps do?
Apps can provide amazing levels of detail, giving information not only about driving behavior but the context for it.
For example, a mobile app from LexisNexis tracks sudden acceleration and can tell whether you hit the gas on a quiet residential street or, more appropriately, on a highway onramp, says David Lukens, director of telematics for LexisNexis Risk Solutions.
Driver-tracking apps can even tell when you’re just a passenger in the car. Everyone’s driving style is unique, like a fingerprint. When location data and driving behavior are analyzed, the software can determine whether you’re behind the wheel.
Not surprisingly, these tracking apps can also detect texting or talking on the phone while driving.
“We’re really excited about how this technology can make a difference,” says Jeff Blecher, senior vice president of strategy at Agero in Medford, Massachusetts, which provides insurance claims management and roadside assistance services. Several insurers are testing the company’s app, Driver360, he says. “Ultimately it’s about saving lives.”
The apps give specific feedback to drivers on how to improve, which could lead to fewer accidents, developers say. Besides monitoring and scoring driving behavior, Agero’s app can detect accidents and send signals to notify emergency responders.
How do insurers use the information?
Insurance companies are taking different approaches. State Farm’s Driver Feedback app, for instance, gives customers driving scores and tips on how to improve, but the carrier doesn’t use the information to set rates.
Allstate customers can earn discounts or cash back on their premiums with good driving scores through its Drivewise usage-based insurance app. Drivers who aren’t Allstate customers can still use the app and earn reward points to redeem for gift cards and merchandise.
Other carriers are using or testing apps for their usage-based insurance programs. These programs base premiums in part on certain driving behaviors, low mileage or both to customers who agree to have their driving monitored.
Censio beat out 10 competitors to produce the app for Progressive. Accuracy and minimal drain on battery life were key, Farrell says. The app measures driving data, such as mileage, hard braking and what time of day the driver is on the road. After every trip it gives drivers a one- to five-star rating, data summary, map of the drive and tips to improve. Drivers with good scores can earn discounts on their premiums.
The insurer tested the app with select customers in fall 2015 and plans to introduce the final app in the second half of this year for Progressive’s Snapshot. With more than 3 million participants, Snapshot is the largest usage-based insurance program today. Customers will have a choice of using the app or a telematics device that plugs into the car’s diagnostics port.
Why do insurers like apps?
Apps appeal to insurers because they cost less than telematics devices and are easy for consumers to use.
Roughly 30% to 50% of customers who sign up for usage-based insurance don’t follow through after the telematics devices are shipped to them, Lukens says. They lose interest, or perhaps don’t feel like rooting around under the dashboard to find the diagnostic port to plug the thing in.
By contrast, apps feel familiar to most consumers.
“It takes just a couple of minutes to set up, and you’re off and running,” says Ash Hassib, senior vice president and general manager for auto and home insurance at LexisNexis Risk Solutions.
Once installed on the phone, the app runs in the  background and tracks every trip. Even if you occasionally get in the car without your phone — which few people do — accurate scores can be calculated as long as most trips are recorded, Lukens says.
How secure are the apps?
Wary about sharing all that data? You’re not alone, although studies show consumers’ privacy concerns are waning. In a 2014 survey by advisory firm Towers Watson, 35% of respondents said they were uneasy about insurers monitoring their driving behavior, compared with 42% who expressed concern in 2013. People in their 20s and 30s are the most comfortable with the idea. In a 2015 survey by the same firm, 92% of millennials said they would be willing to participate in a usage-based insurance program by downloading a smartphone app, compared with 81% of older people.
If you’re thinking about using an insurance company app, know what you’re getting into before signing up. Driver-tracking programs vary by insurer. Be sure to read the privacy statement and user agreement so you know what information will be collected and how it will be used and protected.

This article first appeared at NerdWallet.