More than a million drivers across the country are already taking part in pay-as-you-drive or usage-based insurance coverage from large insurance providers, such as Allstate, Progressive, State Farm and others. Lyndi Cook took advantage of Allstate's offer to save her some money by being a more careful driver. “I was a little leery when the program was first introduced to me. But after researching it, and they sent us the Drivewise in the mail, I realized they don’t do GPS tracking or anything like that. It literally just tracks what time of day you are driving, how fast you are accelerating and your brake speed. We saved ten percent on one vehicle and five percent on another.”
Ranjit Puthran, an Allstate agent, said there are four factors that are monitored. “How fast you drive – your speed. What time of day you’re driving. How many miles you are putting on the vehicle and how hard you break when you come to a stop. All four things are reflected in your driving behavior, your habits. The better you do in these areas, the more you are rewarded.”
Here's how it works. Allstate and Progressive track data through a small device that plugs into the car’s onboard diagnostic port under the dashboard. State Farm’s Safe Driver Discount program uses OnStar, In-Drive or SYNC communication service to log basic driving statistics. Allstate’s Drivewise program tracks four main areas to determine discounts: Safe speeds, safe hours, safe stops and low mileage. Progressive’s Snapshot program tracks how often you make hard brakes, daily mileage, and when you drive. State Farm tracks mileage and the rate of insurance is specific to miles driven.
Most companies allow access so you can go online and track your driving details and projected savings. Some even offer this information on their mobile app. People who show a good driving history can generally save between 10 and 50 percent. The big questoin, of course, is do insurance companies charge extra for poor driving? The answer is no, said Puthran. “It does not penalize you for your driving history. It only rewards you, those safe drivers that are driving safe. It’s perfect for a young driver. If you have a young driver, a teen driver, and you want them to see how they are driving, what their driving history is, what their habits are – that’s a great way for a teen to look at their driving habits and correct those.”
“Technology has come to almost every part of our life and auto insurance is no difference," said Angie Hicks, founder of Angie’s List. "If you have a safe driving record and you have good driving habits you might consider an insurance company that gives discounts when they monitor your driving behavior through a tracking system.” Hicks suggests you talk to your insurance agent to make sure get you understand what information the insurance company is tracking and how it will be used. “If you are not ready to take the plunge on the tracking device and give up some of your privacy, there are certainly other ways to save money on car insurance. When you are doing your comparison shopping be sure to ask about low-mileage discounts and safe driving discounts and always check about bundling your insurance.”