Reviewed and approved by Samuel Corso, licensed Texas insurance agent.

Does usage-based car insurance save money in Texas?

It can — and the honest answer is that it depends on which of two quite different products you're being offered, because they get marketed under the same name and they don't work the same way at all.

The Texas Department of Insurance (TDI) separates them cleanly. One kind charges you for how much you drive: a base amount plus a per-mile fee. The other charges you for how you drive: a device or an app watches your speed, braking, and acceleration, and the score feeds into your price.

The first is arithmetic. You can check it against your own odometer before you sign anything and know roughly where you'll land. The second is a judgment about your driving that you can't verify in advance — you find out after the monitoring period, having already handed over months of data about where and when you drive.

That difference is the whole decision, and it's why "is usage-based insurance worth it?" has no single answer. Here's what we'll cover: how TDI describes each type, the published mileage number that tells you in five minutes whether a pay-per-mile policy is even in the running, what a monitoring program actually watches, the five privacy questions TDI tells drivers to ask, what Texas's insurance commissioner has said about ads claiming discounts are required, the discounts you may already qualify for without a device, and the thing that usually moves an auto premium more than any of it.

Two products, one name

TDI's page on this opens with the general case:

"Many auto insurance companies offer policies that adjust what you pay based on how much you drive or how well you drive."

How much and how well are the two halves, and TDI takes them separately.

Pay-by-the-mile:

"These policies charge you a base amount plus a fee for the number of miles you drive each month. Most companies measure this through a device attached to your car's computer. If you have an older car without a connection, ask your company if you can take a picture it of the car's odometer instead."

"Pay-by-the-mile policies might be good for people who work from home. Some companies offer a cap on the number of miles you drive each day so you don't get charged too much for the occasional road trip."

Usage-based:

"Usage-based insurance policies also use a device plugged into the car's computer or a phone app to monitor how you drive. They look at where and when you drive, how fast you go, and your braking and acceleration habits, among other things."

"Your insurance company uses that information along with other factors – such as your age, type of car, and driving record – to set your cost."

Notice the last line. The monitoring doesn't replace the rating factors you already have; it's added to them. Your age, your vehicle, and your record are still in the calculation. If those are what's driving your premium — and on a young driver or a recent-claim record they often are — a device measures something the price wasn't mostly about. Our guide on why car insurance is so expensive in Texas covers what else is in that number.

The mileage question you can answer today

For pay-by-the-mile, there's a published benchmark, and TDI hands it to you:

"The Federal Highway Administration says the average car is driven 13,476 miles a year, or 1,123 miles each month. If you usually drive less than that, a pay-by-the-mile policy might be a good choice."

That's the test, and it costs nothing to run. Two ways to do it:

• Photograph your odometer today, and again in a month. The difference is your real monthly mileage — not your estimate of it, which for most people is wrong in one direction or the other.
• Or work backwards. If you know the mileage when you bought the car and roughly when that was, the average since then gets you close enough to know which side of 1,123 a month you're on.

If you're well under, a per-mile product is worth pricing. If you're well over, it isn't, and you can stop reading about it. If you're near the line, the shape of your driving matters more than the total: TDI notes that some companies cap the miles they'll charge for in a single day, which is what protects an otherwise-low-mileage driver from being punished for one long trip to see family. Ask whether there's a cap, and what it is.

The two situations where this most often pays off are the ones TDI names: working from home, and driving only for pleasure rather than commuting. Both are worth telling your current company about even if you never take a per-mile policy — which brings us to the discounts that don't require a device.

What a monitoring program is actually watching

For the behaviour-based version, the list TDI gives is worth reading slowly: "where and when you drive, how fast you go, and your braking and acceleration habits, among other things."

Where and when is the part people don't expect. It isn't only speed and hard braking; location and time of day are on TDI's list. Two drivers with identical records can score differently because one of them works nights.

A few practical consequences that follow from how these programs are built:

• A phone app scores the phone, not the car. If the app is measuring your trips, journeys where you're a passenger, in a rideshare, or on a bus can land in your data unless you mark them. Ask how the company handles that, and whether there's a way to exclude a trip.
• Braking events are not fault-weighted. A hard stop because someone pulled out in front of you generally registers as a hard stop.
• The scoring window matters. Ask how long the monitoring period runs, when the result is applied, and whether the rate is then locked in or re-scored at each renewal.
• Ask what happens if the score is poor. Some programs are discount-only; others can move a price in both directions. That is a question with a specific answer for the specific program, and it's the one to get in writing before you plug anything in.

TDI's own instruction on judging the offer is to make it concrete rather than theoretical:

"These types of policies could lower your premium cost if you drive safely or don't drive a lot. Be sure to get an estimate and compare it to the cost and coverage of your current policy."

Note the second half — cost and coverage. A lower number against thinner coverage isn't a saving, it's a different policy. Our guide on how to compare auto insurance in Texas covers what has to match before two quotes can be compared at all.

TDI also points drivers to a free tool for the estimate: the National Association of Insurance Commissioners' Drive Check tool, which TDI says "can help you figure out if a usage-based policy could save you money."

The privacy questions TDI tells you to ask

TDI puts a checklist on its page under the heading "What about my privacy?" These are its questions, and they're better than most of what gets written about telematics:

• "What device will my insurer use to track my driving? What exactly will be monitored?"
• "Do I want my company to have information about my driving?"
• "Am I a good driver? Do I think my driving style will help lower my premium cost?"
• "How much could I save?"
• "Could that information be used after an accident?"

The last one deserves its own moment. A monitoring program produces a detailed record of your speed and location at the time of any trip — including the trip during which something goes wrong. Whether and how that record can be used afterwards is a question about the specific program's terms, and it's a fair thing to ask directly before enrolling rather than after a claim.

The third question is also more useful than it looks, because it's asking you to be honest before a device is. If you know you drive fast, or brake late, a program designed to detect exactly that is an odd thing to volunteer for.

None of which makes these programs a bad idea. Plenty of drivers genuinely do less mileage than they think and drive more gently than average, and for them this is real money. The point is that it's a trade — data for a price — and TDI's framing is that you should price both sides of it before agreeing.

No law requires a discount — whatever the ad says

This one comes straight from the top of the department, and it exists because Texans kept calling to ask. TDI's blog, February 11, 2025:

"Drivers should beware of auto insurance offers, often on social media, hinting at required discounts based on factors such as your age, your car's age, or driving habits."

"Dozens of Texas consumers have called the Texas Department of Insurance asking about so-called laws or regulations enabling discounts for the elderly or for driving less—sometimes only if you act quickly."

And the Commissioner's own words:

"Insurance companies may offer discounts, but no state law or rule mandates discounts or puts a time limit on them," said Insurance Commissioner Cassie Brown. "Such claims are misleading."

So: an ad telling you that you're owed a low-mileage discount, or that a driving-habits discount expires Friday, is describing something that doesn't exist. TDI names the risk in handing your details to one of them: "Personal information you provide in response to an ad might be going to a third-party vendor that sells your information to others."

TDI's alternative is unglamorous and works: "You can avoid misinformation by shopping directly with insurance companies or agents. You can then ask about available discounts and how you can qualify."

The discounts you may already qualify for without a device

Before enrolling in monitoring, it's worth clearing the list TDI says to ask about. From TDI's guidance on lowering an auto premium:

• Good driver discount — TDI: "You can probably get this discount if you haven't filed an insurance claim and have a good driving record."
• Safe car discount — for anti-theft devices. TDI: "If you have anti-theft devices or add them after you buy a policy, tell your company."
• Multi-car discount — TDI: "If you have more than one car on your policy, you'll probably get a discount," and possibly for holding a home or renters policy with the same company. Our guide on bundling home and auto in Texas covers where that does and doesn't help.
• Low-mileage discount — TDI: "If you don't drive much, your chances of staying accident-free are better. Let your company know if you work from home or only drive for pleasure."
• Good student discount — TDI: "If you have high school or college students who get good grades, let your company know." See also our guides on teen drivers and new drivers.

TDI's broader list adds two more to ask about: "Setting up automatic payments and going paperless," and "Certain occupations or group memberships."

And the sentence that makes the whole list worth working through:

"Your company should sign you up for the discounts you qualify for but ask to make sure they do."

That's a five-minute phone call, no device, no data. Note in particular that the low-mileage discount exists as a conventional discount — you may not need a monitoring program to be rewarded for driving less; you may just need to tell your company that you do.

The lever that usually moves more than any of this

TDI's own saving guidance puts monitoring programs in a list, not at the top of one. The other items on that list:

Your deductible. TDI: "A deductible is the amount you pay before the insurance company will pay a claim. Switching to a higher deductible can lower your insurance premium." With the honest caveat attached: "But remember, a higher deductible means you'll pay more out-of-pocket if you do have a claim. Think about how much you can afford to pay if your car is damaged."

Coverage you may no longer need. TDI: "If you have collision coverage on an old car that's paid off, make sure the car's value is worth more than what you're paying for that coverage," and "If you have gap coverage on your car, you can cancel it when you owe less than your vehicle is worth." Both are decisions to make deliberately rather than by default — dropping physical-damage coverage means the next repair is yours.

Shopping. This is the one TDI keeps returning to: "Companies charge different rates and the company you're with might have raised your rates. Companies want your business, and you often get discounts as a new customer." And its cadence: "It's a good idea to shop at least every three years. You often get the best rates when you're willing to switch companies."

TDI's closing caution on all of it: "A good price is only a bargain if you also get good service. Call the Texas Department of Insurance (TDI) Help Line at 800-252-3439 to check a company's complaint record before buying a policy."

Whatever else you do, the coverage floor stays the same. TDI: "Texas law requires you to have at least $30,000 of coverage for injuries per person, up to a total of $60,000 per accident, and $25,000 of coverage for property damage. This is called 30/60/25 coverage." Our guide on what car insurance is required in Texas covers what that floor does and doesn't do for you.

What to do with this

• Work out your real mileage first. Two odometer photos a month apart. Under TDI's cited figure of 1,123 miles a month, a per-mile policy is worth pricing; well over it, and it isn't.
• Ask which product you're being offered — priced on how much you drive, or on how you drive. They are different decisions.
• Ask whether the program can raise your price, not only lower it, and get the answer before you enrol.
• Ask TDI's privacy questions, especially the last one: could that information be used after an accident?
• If it's a phone app, ask how passenger and rideshare trips are handled.
• Get a real estimate and compare cost and coverage against your current policy, as TDI instructs. The NAIC's Drive Check tool is the free starting point TDI points to.
• Clear the conventional discount list first. Low-mileage, good driver, multi-car, anti-theft, good student, autopay, occupation or group. TDI: ask to make sure your company signed you up.
• Ignore any ad claiming a discount is required or expiring. The Commissioner: no state law or rule mandates discounts or puts a time limit on them.
• Shop the whole policy at least every three years, and check the company's complaint record at 800-252-3439 before you buy.

Key facts

• Two products, one label. TDI: policies "adjust what you pay based on how much you drive or how well you drive."
• Pay-by-the-mile is base plus mileage. TDI: "a base amount plus a fee for the number of miles you drive each month," usually measured by a device, with an odometer photo as the alternative on older cars.
• Daily caps exist. TDI: some companies "offer a cap on the number of miles you drive each day so you don't get charged too much for the occasional road trip."
• Usage-based watches behaviour. TDI: "where and when you drive, how fast you go, and your braking and acceleration habits, among other things."
• It's added to the usual factors, not instead of them. TDI: the company uses that data "along with other factors – such as your age, type of car, and driving record."
• The benchmark. TDI, citing the Federal Highway Administration: the average car is driven "13,476 miles a year, or 1,123 miles each month."
• TDI's test for the offer. "Be sure to get an estimate and compare it to the cost and coverage of your current policy."
• A free comparison tool. TDI points to the NAIC's Drive Check tool to "help you figure out if a usage-based policy could save you money."
• Privacy is a question to ask up front. TDI's list includes "What exactly will be monitored?" and "Could that information be used after an accident?"
• No discount is mandated. Commissioner Cassie Brown: "Insurance companies may offer discounts, but no state law or rule mandates discounts or puts a time limit on them."
• Ads can be a data harvest. TDI: personal information given in response to such an ad "might be going to a third-party vendor that sells your information to others."
• A low-mileage discount can exist without a device. TDI: "Let your company know if you work from home or only drive for pleasure."
• Ask for your discounts. TDI: "Your company should sign you up for the discounts you qualify for but ask to make sure they do."
• Shop every three years. TDI: "You often get the best rates when you're willing to switch companies."
• The Texas floor is unchanged. TDI: "30/60/25 coverage" — $30,000 per person, $60,000 per accident, $25,000 property damage.

Sources: Texas Department of Insurance — How you drive could save you money on car insurance, Ways to save money on car insurance, Ask for discounts to lower your auto insurance premium amount, Companies may offer auto insurance discounts. No law requires discounts. (February 11, 2025), Auto insurance guide (CB020). TDI's Help Line is 800-252-3439, Monday to Friday, 8 a.m. to 5 p.m. Central time. Programs, discounts, monitoring terms, and data practices vary by company and by policy, and no discount is guaranteed; your own policy documents and the program's own terms govern. This page is general information, not legal advice; for a question about your own policy, check the policy or contact the Texas Department of Insurance.

Take the next step

The decision here is smaller than the marketing makes it look. Measure your mileage, decide whether you're comfortable being watched, get one estimate, and compare it against a like-for-like version of what you already have.

But do the cheap thing first. Call your current company and walk TDI's discount list — low-mileage, good driver, multi-car, anti-theft, good student, autopay, occupation. If you started working from home and never told them, that's a conversation that may be worth having before any device goes into the car.

And if the answer to all of it is my premium is still high, the problem probably isn't your driving habits — it's the company's rate for your profile, which only shows up when you put it beside somebody else's.

Credify is a licensed insurance agency in Texas (License #: 3309669). We compare quotes from multiple licensed Texas carriers in one short form, with no obligation; each insurer has sole responsibility for its own products. Our guides on comparing auto insurance in Texas and getting car insurance quotes cover what to have ready. 📞 Talk to Credify 24/7.