This Group Wants to Change California Telematics Laws

From Progressive’s Snapshot to Allstate’s Drivewise, safe driving telematics programs are everywhere, and they’re promising to save Americans hundreds of dollars a year.

Except in California. But the Coalition for Safe Driving Incentives (CSDI), a project of StopDistractions.org, aims to change that.

California has always been the odd state out when it comes to insurance, thanks to an unusually rigid regulatory environment in a state with high environmental risks and a high cost of living. In 1988, California’s Proposition 103 created strict regulations for insurers doing business in the state, severely limiting the data carriers may use to estimate driver risk and set the price of insurance. Since the 1980s, technology has evolved to give insurers elsewhere in the country new tools for estimating risk in real time — but California’s insurance code hasn’t caught up.

Jennifer Smith, CEO and co-founder of StopDistractions.org, says that without access to telematics, California drivers are cut off from savings and safety incentives that all 49 other states enjoy.

“The [telematics] approach is already working in every other state and in nearly every developed insurance system around the world,” Smith says. “California drivers are the only ones being left behind.”

Why insurance companies can’t offer safe driving incentives in California

California’s restrictions on telematics programs come down to fundamental differences in how insurers are permitted to calculate risk in California versus in other states.

In most states, insurance companies are authorized to use a broad range of rating factors to calculate the risk associated with a given applicant. For example, most states permit insurers to charge higher rates for drivers under age 25, those with poor credit histories or those in certain ZIP codes.

In California, things work differently. Legislators passed Proposition 103 in 1988 with the goal of keeping auto insurance rates transparent and fair. Under Prop 103, insurance premiums in California must be based on three mandatory factors, in descending order of importance:

• Your driving safety record
• The number of miles you drive each year
• The number of years of driving experience you have

In addition to the three mandatory rating factors, the California Code of Regulations lays out a list of permissible — but optional — rating factors that insurers may use in California. These include vehicle type, completion of driver training courses and the frequency and severity of claims in your geographic area. But those factors must be secondary to the “big three” outlined above.

And telematics, a source of risk-estimating data for insurers elsewhere in the country, is off limits altogether.

The cost of keeping telematics out of California

What’s lost when insurers can’t use telematics data to price auto coverage? According to experts in the industry and safe driving advocates, the cost to Californians is significant: reduced road safety, a greater environmental burden, racial bias in insurance pricing and few ways for Californians to save on increasingly steep insurance bills.

Cost #1: Limited savings options

In theory, California’s strict regulations on insurance rating were designed to create greater transparency and give consumers more control over the rates they pay for coverage. After all, the most important rating factor for insurers in California is the insured’s driving history — not their ZIP code, gender or credit.

But without telematics data, insurance companies are left to separate safe drivers from unsafe drivers on the basis of DMV records alone. Traffic tickets can stay on a driver’s California motor vehicle report for three to five years, and insurers may even factor a past ticket into your base premium after that penalty period has passed — even if you remained accident-free and practiced safe driving habits ever since the incident. In other words, insurance companies’ picture of your driving risk in California can only be based on isolated snapshots in time, which might not reflect how you actually drive on a daily basis.

Telematics data, which offers real-time insights into how you drive, can draw a more accurate distinction between habitually safe and unsafe drivers. Brett Odom, policy vice president of auto and alternative vehicles at the National Association of Mutual Insurance Companies, says that California’s restriction on telematics data means that “cautious drivers who are committed to driving safely do not have the opportunity for that pro-risk mitigation factor to be fully evaluated by their auto insurers.”

California is the only place in the developed world — not just the United States, but globally — where safe driving behavior cannot be used to help lower your insurance premium. Every other state and every modern insurance market allows behavior-based pricing because it works.

— Brett Odom
Policy vice president, Auto and alternative vehicles, National Association of Mutual Insurance Companies

Cost #2: Decreased road safety

It’s easy to see telematics as just a tool for insurance discounts, but research shows that it may also improve driver safety by giving real-time feedback to drivers.

“The research is clear,” Smith says. She cites a study by researchers at the University of Pennsylvania that showed that drivers who receive feedback about habits like mobile phone use while driving demonstrably reduce those negative behaviors.

According to the team’s most recent study, correctly deployed usage-based insurance programs could reduce distracted driving in the U.S. by 2 billion hours per year. Cambridge Mobile Telematics, a primary provider of telematics services to U.S. insurers, estimates that usage-based insurance enrollment helped to prevent 105,000 crashes and 480 fatalities in 2024 alone.

Data like this suggests that the effect of folding telematics data in the California auto insurance industry could be substantial. In addition to giving insurers more precise tools for calculating risk, the widespread adoption of telematics has the potential to actually reduce risk, lowering the cost of crashes that the industry needs to absorb.

Cost #3: Environmental burden of unsafe driving

The kinds of driving habits that telematics apps work most effectively to address — hard braking, speeding and harsh acceleration — also carry an environmental impact in addition to their implications for safety. In a state like California with ambitious emissions targets for the automotive industry, opening the gates to telematics technology could result in a rise in the type of driving that supports these goals, advocates say.

The environmental burden of risky driving doesn’t just impact state policy. It’s also a financial concern for vehicle owners who may be feeling the pinch of rising insurance costs and steep fuel prices. By following the lead of telematics apps, Californians could reduce fuel consumption along with their on-road risk.

Cost #4: Racial bias in insurance pricing

A final concern raised by the CSDI is the link between California’s motor vehicle record-based insurance rating system and racial bias in policing.

“California’s pricing model still leans more on traffic tickets and motor vehicle records than any other state,” Smith points out. “It’s the most important factor.”

But traffic tickets aren’t pure, unbiased records of driver behavior. Instead, they often reflected biased policing.

A 2022 study by Stanford University comparing telematics data with law enforcement data found that while speeding itself is not correlated with neighborhood demographics, speeding enforcement is often more concentrated in areas with a specific racial makeup. In California, Smith says, “drivers in Black and Latino neighborhoods are disproportionately stopped [by law enforcement], even when their actual speeding behavior is the same.”

This unbalanced policing leads to a pool of data — driving records — that may be as reflective of law enforcement biases as of real-world driving safety. When insurers are restricted to basing their prices on that data, the result may be unintentionally discriminatory, pushing higher insurance premiums in areas that happen to have higher police activity.

How a new legislative resolution could change California’s outdated insurance rating system

The CSDI supports ACR 52, a concurrent resolution introduced in the California Assembly this spring by Assemblymember Tina McKinnor. The resolution calls for Insurance Commissioner Ricardo Lara to “take steps necessary to make optional safe driver incentive programs available for insurance use in California.”

“California does not need to rewrite Prop 103,” Smith points out. Along with the three mandatory factors of driving history, annual mileage and experience, Prop 103 carves out space for “other factors that the commissioner may adopt by regulation and that have a substantial relationship to the risk of loss.”

Through ACR 52, the CSDI hopes to initiate the rulemaking process by which Commissioner Lara could declare telematics data a legitimate rating factor for insurers in California. That change, Smith says, would be “fully aligned with Prop 103’s original goals of fairness, transparency, and accountability.”

But as of July 2025, the resolution is sitting in the assembly with little forward momentum. A previous version introduced in 2024 also stalled out, despite multiple letters of support. Still, Smith and her comrades at the CSDI haven’t lost hope for a future in which California drivers can take greater control of both their safety and expenses.

This organization is focused on what we can do today to fix road safety today. We are not waiting around for the holy grail of automation or relying on billions of dollars in future spending to make roads safer. Insurers are already willing to fund this shift. The tools exist. The incentives work. Californians deserve access to both, and the families of victims of traffic violence deserve better.

— Jennifer Smith
CEO and co-founder, StopDistractions.org