Being a good driver pays off - literally.
Many auto insurers offer safe-driving discounts that can save drivers hundreds of dollars a year, and possibly thousands over their lifetime.
While these discounts offer substantial financial benefits to the driver, they’re just as important to the insurer, said Maya Afilalo, industry analyst at car insurance marketplace AutoInsurance.com.
“Safe drivers save insurers money and lower their financial risk,” Afilalo told The Independent in an email. “These discounts are a financial incentive for customers to drive safely, which saves insurers more money in the long run.”
Knowing how these programs work and what consumers can do to get them is the first step in getting a safe-driving discount.
Discount dynamics
The modern safe-driving discount emerged in the 1990s. That’s when auto insurers started using telematics - gathering and transmitting driving data - to judge how safe a driver was, Afilalo said.
“Progressive was the first company to offer a telematics insurance product, but they didn’t catch on in popularity until the 2010s, when smartphone technology made telematics tracking a lot less expensive,” she said.
Telematics provides insurers the benefit of gauging discounts using real-time driving data.
“It gives insurers a granular and real-time risk assessment rather than one based on historical claims data alone,” Joshua Morrison, auto insurance advisor at insurance business Bad Driving, told The Independent in an email. “Consequently, safe-driving discounts are more accessible and better aligned with real-world driving patterns for drivers who habitually drive low-risk.”
Telematics programs usually require people to either download the insurer’s app for tracking or plug a device into the diagnostics port above the driver’s side floorboard.
The other popular discount option is related to a customer’s driving record, and whether they’ve stayed away from infractions and accidents, Afilalo said. Rather than using real-time data to make discount decisions, insurers use a driver’s past to judge their future rates.
Getting that golden discount
Generally speaking, keeping a clean driving record is the easiest way to earn a safe-driving discount. Steer clear of accidents, avoid speeding, don’t drink and drive, and, in theory, you’ll earn lower premiums.
Earning those savings through telematics is a little tougher. Insurers use telematics to get real-time data about your driving habits, said Franklin Manchester, principal global insurance advisor at data and AI analytics firm SAS.
“Through ubiquitous cell phone technology, while the app is active and a person is driving, the device monitors their speed, maneuvering, nighttime driving, hard braking and even how often they look at their cell phone,” Manchester told The Independent by email.
Telematics also analyze how much you drive, how far over the speed limit you go, how quickly you accelerate and how aggressive your turning is, according to the consumer advocacy group Consumer Federation of America.
While the savings from telematics-based safe driver discounts can be substantial, the opposite can be true, too. Drivers may end up paying higher premiums because of their habits on the road.
A July 2025 report from the Maryland Insurance Administration found that 31 percent of drivers in the state saw their premiums go down with telematics. Some 24 percent actually saw their premiums go up, and 45 percent saw premiums stay the same.
Savings for savvy drivers
Drivers can earn discounts of 10 percent to 40 percent through their clean driving records or telematics data, experts told The Independent.
An insurer might even give a driver a discount of 5 to 10 percent just for signing up for telematics, Afilalo said. But customers rarely get savings of more than 20 percent.
“Companies advertise discounts as high as 25 to 40 percent, but anecdotally at least, we rarely see customers earn more than 15 to 20 percent off at renewal,” she said.
Drivers using telematics typically have their discounts recalculated when they renew their policy. Some insurers will only offer discounts for good driving, not penalize customers with higher rates for bad driving. That’s not always the case, though, as the Maryland study showed.
“Other insurers can actually raise your premiums for risky driving,” Afilalo said. “So, it’s important to read the fine print and decide what you’re comfortable with.”
This article is sponsored by Credit Karma. We may earn a commission if you engage with their services using links in this article.
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