I found this article on the Allstate website that does an excellent job of explaining the device.

What Is a Telematics Device?

If you’re a responsible driver, using a telematics device provided by your insurance company could be a great way to save since some companies offer a discount on your insurance for safe driving habits. If you’re not sure what a telematics device is or what it does, read on for some handy information.

A woman driving in the car

What is a telematics device, and what does it measure?

A telematics device is generally a system that you install in your car that records information about your driving habits, such as the number of miles you drive, your speed, and how quickly you brake. These systems sometimes analyze the time of day when you drive, as well. If you use a telematics device from your insurer, you agree to allow the device to send this information to your insurance company. In some cases, if the data show you practice safe driving, you may become eligible for car insurance discounts. (If, however, the device shows that your driving habits are not as safe, typically, you are not penalized with higher premiums.)

Where is it installed?

Telematics devices, such as Allstate’s Drivewise©, are usually small enough to fit in the palm of your hand, and installation is fairly straightforward. In most cases, you plug the device into your vehicle’s onboard diagnostic port (OBD-II port), which is usually located near the steering column, under your dashboard. Vehicles produced since the mid-1990s typically have this port and can be fitted with a telematics device.

How does it work?

After you’ve hooked up a telematics device, it will start recording information about your driving behavior, which it usually sends to your insurance provider over wireless phone networks. As you drive, the device records the data, which can help lead to savings if you’re a safe driver.

What are the benefits?

Telematics devices can help your insurance company reward you for being a safe driver. Installing a telematics device in your car, truck or SUV can help you qualify for car insurance discounts, which will help you keep some hard-earned cash in your pocket. Safe drivers avoid driving habits such as hard stops, traveling late at night—which can be more dangerous than daylight driving—and moving at high speeds. Drivers who put fewer miles on their vehicles per day may also qualify for discounts.

An additional perk of adding a telematics device to your vehicle is that it might make you more cognizant of your driving behavior. Many insurers’ programs allow you to go online to track the data your telematics device collects about your driving habits, which can help you learn what you need to do to become a better driver.

Better driving habits can lead to even more benefits, in addition to increased safety behind the wheel. If you adjust your driving behaviors so that you avoid quick bursts of acceleration and hard stops, for example, you may also get better fuel economy, which could work out to a few extra miles between fill-ups.

We’d all like to lower our monthly expenses, and if you have safe driving habits, a telematics device may be one way to help you earn savings—and become a better driver.