Your new car knows more about your driving than you think. In 2025, the vehicle sitting in your driveway isn’t just transportation—it’s a mobile data center that could slash your insurance premiums or complicate your coverage in ways most drivers don’t understand yet.
Four major automakers now sell insurance directly. General Motors offers OnStar Insurance. Ford partners with Arity for usage-based policies. Toyota works with Insurance Management Solutions. Tesla runs its own usage-based program. According to ABC17News reporting, these programs “allow buyers to get coverage quotes at the point of sale.”
The shift affects 17 million Americans buying new vehicles this year. If you purchased a car with advanced driver-assistance systems (ADAS), enrolled in a telematics program, or considered an OEM insurance offer, this changes how you shop for coverage.
Why Automakers Started Selling Insurance
The insurance industry operates on risk assessment. Traditionally, insurers priced policies using demographics, credit scores, and driving records—blunt instruments that treated all 35-year-old suburban drivers roughly the same.
Vehicle technology demolished that model.
Modern cars generate terabytes of data: hard braking events, acceleration patterns, cornering forces, time of day driven, miles traveled. Automakers possess this information. Insurers want it. The logical result? Partnerships that turn car manufacturers into insurance distributors.
Four embedded insurance models emerged:
- Broker partnerships: Automakers connect buyers to third-party insurers at purchase, earning referral fees while insurers access customers at the decision moment when they’re most likely to switch providers.
- White-label products where insurers underwrite policies sold under the automaker’s brand.
- Captive OEM insurers like Tesla Insurance, where the manufacturer underwrites risk directly using proprietary vehicle data unavailable to traditional carriers.
- Managing general agents (MGAs) that handle policy administration while third parties assume underwriting risk.
The article notes these “bundled services appeal to tech-savvy buyers who value convenience and are open to loyalty-based pricing structures.” Translation: If you’re comfortable sharing driving data, you might save 10-30% compared to traditional policies.
How Telematics Programs Actually Work
Telematics isn’t new. Progressive launched Snapshot in 2008. What changed in 2025? Integration depth.
Older telematics required plug-in dongles. Current systems use built-in cellular modems already transmitting software updates, navigation data, and diagnostic information. Your consent activates insurance data sharing—the hardware was always there.
| Technology | Data Captured | Insurance Impact |
|---|---|---|
| Telematics | Mileage, time of day, braking | Usage-based discounts |
| ADAS | Collision avoidance activations | Safety feature discounts |
| GPS tracking | Location, theft recovery | Anti-theft discounts |
| Connected systems | Vehicle health, maintenance | Proactive risk reduction |
The tradeoff? Privacy. Your insurer knows where you drive, when you drive, and how aggressively you operate the vehicle. Some policies adjust premiums monthly based on behavior. Drive cautiously for six months, then take one aggressive merge onto a highway? Your next bill might reflect that event.
What This Means for Your Wallet
Potential savings exist, but they’re not automatic.
Drivers logging under 7,500 miles annually see the biggest telematics discounts—sometimes 25-40% below standard rates. Those commuting 50 miles daily at rush hour? Usage-based insurance might cost more than traditional coverage.
ADAS-equipped vehicles qualify for separate discounts. Forward collision warning, automatic emergency braking, and lane-keeping assist systems reduce accident frequency. Insurers typically offer 5-15% discounts for vehicles with these features, regardless of telematics enrollment.
Anti-theft technology adds another layer. Built-in GPS tracking helps recover stolen vehicles faster, reducing total loss payouts. Some insurers discount premiums 5-10% for factory-installed tracking systems.
The catch: These discounts don’t always stack additively. A 25% telematics discount plus 10% ADAS discount doesn’t necessarily equal 35% total savings. Insurers apply discounts sequentially or cap combined reductions.
4 Practical Steps for 2025 Coverage Decisions
Compare apples to apples. Request quotes from both traditional insurers and OEM programs. Tesla Insurance might quote $1,200 annually for a Model 3, but that assumes excellent driving scores. What happens if your score drops to “average”? Get that answer in writing before canceling existing coverage.
Read the data privacy terms. Who owns the driving data? Can insurers sell it to third parties? What happens if you switch carriers—do you retain access to your driving history? The article advises drivers to “understand data privacy terms” when shopping around.
Review coverage annually as the article recommends, “especially after adding new tech or switching vehicles.” A 2023 policy might not cover software-related accidents the same way a 2025 policy does. Over-the-air software updates can alter vehicle behavior, potentially creating coverage gaps if your policy language hasn’t kept pace.
Don’t ignore traditional discounts. Defensive driving courses still work. Bundling home and auto policies remains effective. Hybrid vehicles often qualify for green discounts separate from ADAS technology savings. Loyalty penalties hurt—switching insurers every 2-3 years typically saves more than staying put.
The Role of AI Comparison Tools
Shopping 15 insurance websites manually wastes time. Insurtech platforms now use AI to generate personalized comparisons across dozens of carriers simultaneously.
These tools analyze your vehicle’s specific technology suite, cross-reference it with insurer discount programs, and highlight policies offering the best value for your driving profile. Some platforms predict annual costs based on your typical mileage and driving times, showing whether usage-based insurance makes financial sense before you enroll.
The limitation? AI recommendations depend on data accuracy. If you underestimate annual mileage by 3,000 miles, the suggested policy might underprice your actual risk, leading to premium increases at renewal.
When Traditional Coverage Still Wins
Usage-based insurance isn’t universal salvation.
High-mileage drivers—delivery contractors, traveling sales professionals, ride-share operators—often pay more under telematics programs. If you drive 20,000+ miles annually with frequent urban rush-hour exposure, traditional policies with flat-rate pricing might cost less.
Privacy-conscious consumers may reject data sharing entirely. That’s valid. Standard insurance policies still exist without telematics requirements, though they increasingly represent the premium-priced option as insurers shift toward behavioral pricing models.
Older vehicles lack the connected technology required for OEM insurance programs. If you’re driving a 2018 model without factory telematics, your options remain limited to traditional carriers or aftermarket dongle-based programs.
Frequently Asked Questions
Do telematics programs increase premiums for aggressive drivers?
Yes, potentially. Usage-based insurance adjusts pricing based on behavior. Frequent hard braking, rapid acceleration, or late-night driving can increase premiums 10-20% compared to the initial quote. However, most programs guarantee you won’t pay more than the standard rate in the first policy period, giving you time to improve driving habits before pricing adjusts upward.
Can I switch from telematics to traditional insurance if rates increase?
You can switch carriers at any time, though mid-policy cancellations may incur fees. Shop for new coverage 30-45 days before renewal to avoid gaps. Be aware that if telematics revealed risky driving patterns, other insurers may price your coverage higher based on that claims history or driving record, even without direct access to your telematics data.
Which automaker insurance program offers the best rates in 2025?
No single program wins universally. Tesla Insurance typically offers competitive rates for Tesla owners with high safety scores, but quotes vary by state and driving profile. Ford’s Arity partnership and GM’s OnStar Insurance work well for drivers logging moderate miles in suburban areas. Toyota’s program through Insurance Management Solutions targets safe drivers with excellent credit. Compare at least three options—OEM and traditional—before deciding.
What happens to my driving data if I cancel telematics insurance?
Data retention policies vary by carrier. Some delete driving data within 30-90 days of policy cancellation. Others retain it indefinitely for actuarial analysis, though personally identifiable information gets anonymized. Review the privacy policy before enrolling—some insurers allow you to request data deletion upon cancellation, while others don’t. Your vehicle’s manufacturer may continue collecting driving data separately for product improvement purposes regardless of insurance status.
Do ADAS discounts apply if I disable safety features?
Technically, discounts assume active use of safety systems. If your vehicle’s telematics reports consistently disabled features—lane-keeping turned off, collision warning deactivated—some insurers may remove the discount at renewal or during claims investigation. Occasionally disabling features for specific driving conditions (off-road, track use) typically doesn’t trigger discount removal, but chronic disabling might.
Bottom Line
Vehicle technology reshaped auto insurance faster than most drivers realized. The 2025 market rewards consumers who understand their options: telematics programs for low-mileage drivers, ADAS discounts for safety-conscious buyers, OEM insurance for brand-loyal customers willing to share data.
But rewards require effort. As the article advises, “Review coverage annually, especially after adding new tech or switching vehicles.” The days of setting auto insurance on autopilot ended when your car became smarter than your policy.
The technology exists to lower premiums significantly—if you’re willing to let your driving habits prove you’re worth the discount. For privacy-focused drivers or high-mileage commuters, traditional coverage remains viable, just increasingly expensive relative to behavior-based alternatives.
Shop around. Compare traditional and usage-based quotes. Read the fine print on data sharing. Then decide whether saving money justifies sharing your driving data with insurers who’ll use it to price your next policy.