By MyAutoResource Editorial Team · Reviewed by Steven Sun · 7 min read · Updated August 13, 2026
- Every new vehicle sold in the U.S. since 2008 has carried a built-in event data recorder, and by 2020 roughly 70% of U.S. auto insurers were projected to use telematics-based pricing, according to NAIC.
- The FTC finalized a 2026 order barring GM and OnStar for five years from selling drivers’ precise geolocation and driving-behavior data without consent, after finding it affected some drivers’ insurance eligibility.
- If you are financing a car, insurance and your loan payment draw from the same monthly budget, so a UBI discount is worth weighing against the loan you are already carrying, not evaluating in isolation.
- Ask specifically whether GPS tracking is optional, how long data is retained, and whether a plug-in device alternative to a phone app is available before enrolling.
Priya just financed a 2023 Honda Civic and her monthly payment is $438. Her insurer offered a usage-based insurance app that tracks braking, speed, and trip time in exchange for a discount she has not yet seen the size of. She wants the lower premium to ease the squeeze of that car payment. She also does not love the idea of an app watching where she drives at 11 p.m. on a Tuesday. That tension, save money on the car you are still paying off or protect your location data, is the real decision usage-based insurance asks you to make.
What Usage-Based Insurance Actually Tracks
Usage-based insurance, often called UBI or telematics insurance, uses a phone app or a small plug-in device to monitor how you actually drive. That is different from pricing your policy on general statistics like your age or zip code. The National Association of Insurance Commissioners, the group that represents state insurance regulators, lists the data points these programs commonly collect. Those include miles driven, time of day, location and route, rapid acceleration, hard braking, hard cornering, and airbag deployment. Some programs also read phone usage patterns while the vehicle is moving. Every new vehicle sold in the United States since 2008 already carries an event data recorder, a device that logs basic crash data, so some level of driving data collection is not new. What UBI adds is continuous behavioral tracking tied directly to your premium, not just a black box that activates in a crash.
Why This Decision Matters More While You Are Financing
If you are still paying off the car, insurance is not a separate expense from your loan. It is part of the same monthly number you have to hit. A used-car buyer carrying the average loan Experian tracked in its Q1 2026 report, $27,070 over 68 months, is already budgeting a real payment before insurance even enters the picture. A new-car buyer faces an even larger number, since Experian puts the average new-car loan at $43,925 over roughly 69 months. A UBI discount that meaningfully lowers your premium can free up room in that budget, which matters when you are also covering financing costs on the same vehicle. But the tradeoff is not abstract. The location and driving-behavior data you hand over during the loan term is data an insurer can hold for years. Sometimes a data broker downstream of the insurer holds it too, well past the day you make your final loan payment. Weigh the discount against what you are giving up for the life of that data, not just whether the app is convenient to install today.
What Actually Happens to Your Data Once You Opt In
This is not a hypothetical privacy concern. The Federal Trade Commission has already taken enforcement action over exactly this kind of data. In a case finalized in 2026, the FTC found that General Motors and its OnStar service collected precise geolocation and driving-behavior data. The company shared that data with consumer reporting agencies without clearly telling drivers or getting their consent. Some of that data reportedly affected insurance rates and eligibility for people who never signed up for a UBI program at all. The FTC’s broader guidance on connected vehicles now requires companies to get your affirmative consent before collecting this kind of data. It also requires letting you request a copy of what they have, ask for deletion, and turn off precise location tracking specifically. Those protections exist because regulators found real companies falling short of them, not because the risk was theoretical.
| Data point | Figure | Source |
|---|---|---|
| New U.S. vehicles equipped with onboard telematics (by end of 2018) | 80% | NAIC |
| U.S. auto insurers projected to use telematics-based pricing (by 2020) | 70% | NAIC |
| New vehicles sold with a built-in event data recorder | Every vehicle since 2008 | NAIC |
| FTC enforcement precedent on unconsented driving-data sharing | GM/OnStar barred 5 years from selling geolocation and driving-behavior data (finalized 2026) | FTC |
Questions to Ask Before You Turn the App On
Ask your insurer directly whether GPS location tracking is required or optional, since some programs will score you on speed, braking, and time of day without pulling continuous route data. Ask how long the company keeps your raw driving data and whether it is shared with or sold to any third party, including affiliated companies. Ask whether you can pause tracking for specific trips, and whether a plug-in device is available as an alternative to a phone app. A dedicated device typically will not touch your phone’s other location or usage data the way an app can. A program that answers these questions clearly, in writing, is behaving the way regulators now expect. A program that is vague about any of them deserves more scrutiny before you enroll, not less.
A Plug-In Device Is Not the Same Privacy Trade as an App
The delivery method matters as much as the program itself. A dedicated plug-in device typically reads only driving-related metrics such as speed, braking, and trip length, and it does not have access to anything else on your phone. A mobile app, by contrast, often runs with background location permissions. Depending on the insurer’s settings, it can pick up signals unrelated to driving, like which other apps you have open or how often you unlock your phone. If privacy is your main concern, ask specifically whether your insurer offers a plug-in option before assuming the app is your only way to participate. Removing a plug-in device is also simpler than revoking app permissions cleanly, since some apps continue running background processes even after you think you have disabled tracking.
Weighing the Discount Against the Loan You Are Already Carrying
There is no universal answer to whether UBI is worth it, because the honest answer depends on what your specific insurer discloses and what discount they actually put in front of you in writing. What is not honest is treating the decision as free. If you are financing a car, you already have one lender with a claim on your monthly budget. Adding an insurer that also wants continuous access to your location and driving habits is a second party with an ongoing interest in your behavior, not a one-time transaction. Read the data policy before you install anything and confirm the discount in writing. Revisit the decision at your next renewal instead of assuming the terms you agreed to on day one still apply years later.
Frequently asked questions
Does usage-based insurance always save money?
Not automatically. The discount depends on your individual driving data and your insurer’s specific program, and it is not guaranteed to be large enough to offset the data you share. Get the discount in writing before enrolling rather than assuming a lower rate.
What data do these programs actually collect?
Common data points include miles driven, time of day, location and route, speed, hard braking, and rapid acceleration, according to the National Association of Insurance Commissioners. Some programs also track phone usage while the vehicle is in motion.
Can I opt out of GPS tracking specifically and still participate?
Some programs allow you to disable precise location tracking while still scoring speed, braking, and time of day. Ask your insurer directly, since this option is not offered by every program.
What happened with GM and OnStar, and does it affect me?
The FTC found GM and OnStar shared drivers’ precise location and driving-behavior data with consumer reporting agencies without clear consent, which affected some drivers’ insurance eligibility. The 2026 settlement bars that specific practice for five years and requires clearer consent going forward.
Should I enroll in UBI while I’m still financing my car?
That is a personal call, but weigh the potential discount against the fact that you are already carrying a loan payment and adding a second party with ongoing access to your driving data. Confirm the discount size and the data policy in writing first.
