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Auto insurance prices skyrocketed in 2023. According to the Bureau of Labor Statistics, the average cost of auto insurance increased by 20.3% from December 2022 to December 2023, making this the largest annual car insurance price increase since 1976. There are many reasons for the rise in car insurance prices: Cars are more expensive to repair, mechanics have raised their prices, and people are getting in more car crashes.
As a driver, so much of what happens on the road is out of your control. If traffic is congested, if the weather is bad, or if another driver crashes into your vehicle, you can't always protect yourself from that. But there's one thing you can control: your own driving habits. Several car companies are now offering a special kind of auto insurance that rewards you for safer driving. It's called "embedded insurance," or "telematics car insurance."
Let's look at what embedded car insurance means, and why it could give you a better deal on car insurance in 2024.
Embedded insurance: Car insurance from inside your car
Did you know that auto insurance isn't just offered by traditional auto insurance companies anymore? Some car companies have started to offer auto insurance that works within your vehicle. This is a type of embedded insurance, where you can get insurance while purchasing or experiencing another product or service.
Here's how embedded car insurance works: Some car companies now offer telematics technology that -- with your permission -- collects and shares data about your driving habits. This technology is already built into connected vehicles from newer model years. If you sign up for this special kind of car insurance, you can qualify for lower-cost car insurance based on your driving habits.
Different car insurance companies measure different types of telematics data. For example, some might track your acceleration and braking speed, how many miles you drive, what times of day you drive, how much time you spend idling in traffic, your seat belt usage, and other aspects of your life behind the wheel.
Car insurance companies want to reduce risks and avoid paying out money for collisions. If you help them save money, the best insurance companies will reward you for safer driving. Telematics car insurance is an intriguing option, because it lets you take control of your own car insurance premium. It's an opportunity to prove to your car insurance company that you're a responsible driver who deserves a lower car insurance premium.
Which car companies offer telematics car insurance?
Ford, GM, and Tesla are a few major car companies that are offering telematics car insurance. Let's look at a few details for each of these connected vehicle telematics car insurance plans.
Ford: Ford Insure
Ford Insure is a special insurance plan for newer Ford vehicles (model year 2020 or newer) that have connected vehicle technology. This telematics insurance can reward Ford drivers with discounts of as much as 40% off, and it's available in most states as of Jan. 26, 2024 (except for Alaska, Hawaii, Louisiana, Massachusetts, and Oklahoma). Ford Insure also gives you the option to bundle your auto insurance with homeowners insurance or pet insurance.
GM: OnStar Insurance
OnStar Insurance is available for Buick, Cadillac, Chevrolet, or GMC vehicles that are model year 2016 or newer. As of Jan. 26, 2024, OnStar Insurance is available in only three states: Arizona, Illinois, and Texas. But it could be coming soon to Indiana, Ohio, Pennsylvania, and other states.
Tesla: Tesla Insurance
Tesla electric vehicles are known for sophisticated digital technology, and they receive automatic over-the-air software updates like a smartphone or laptop. Tesla Insurance uses that same seamless digital connection between your car and the Tesla company.
You can sign up for Tesla Insurance via the Tesla app. With your permission, Tesla Insurance measures your real-time driving behavior data to give you a Safety Score that determines your monthly auto insurance premium.
To get Tesla Insurance, you must own a Tesla Model S, Model 3, Model X or Model Y. Tesla's insurance coverage is only available in 11 states as of Jan. 26, 2024 (Arizona, Colorado, Illinois, Maryland, Minnesota, Nevada, Ohio, Oregon, Texas, Utah, and Virginia).
Why car insurance from your automaker could be a better deal
If you've considered telematics car insurance before, or if you just want to save money after a year of big premium increases, getting car insurance from inside your car could be a solution. Here are a few reasons why these car companies' auto insurance programs might be a good deal.
No new gadgets or devices
Auto insurance companies' telematics insurance plans often require you to download apps or plug in a new device into your vehicle. If you get car insurance from your car company, you don't have to worry about that. The telematics insurance technology is already built into your connected vehicle.
Save on insurance in multiple ways
Ford Insure offers interesting options to help you save more money, like bundling your Ford Insure auto insurance with homeowners insurance or pet insurance. With Ford Insure, you can also choose a pay-per-mile insurance plan, depending on your lifestyle and how much you drive.
Special benefits and discounts
GM's OnStar Insurance offers a few unique benefits, like loyalty discounts for Buick, Cadillac, Chevrolet, and GMC drivers, and OEM parts coverage to make sure your vehicle gets repaired with GM Genuine Parts. OnStar Insurance also gives you the chance to earn accident forgiveness and deductible waiver benefits.
Bottom line
If you drive a newer, connected vehicle and have a good relationship with your automaker, you might want to consider telematics insurance from your car company. These special auto insurance programs are easy to use and offer exciting opportunities to save money. No new gadgets required!
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