There’s a way to save on auto insurance that’s gaining popularity, but you’ll have to trade your privacy for lower premiums.
Trading privacy for savings on auto insurance
Under what’s generally referred to as the ‘pay as you drive’ model, auto insurers track your every move using small monitoring devices that can plug into your car’s diagnostic port.
With the data that’s collected, the insurers can monitor when you drive, where you drive, how fast, and how you accelerate, brake and change lanes. Then they use that info to set rates, punishing “risky” drivers with higher rates and rewarding “safe” drivers with lower ones.
Progressive Insurance now has 1 million insureds getting an average savings of $150 a year on their auto insurance. The Chicago Tribune reports 7 out of 10 Progressive customers who try the pay-as-you-drive option end up saving money. Almost 30% of their total customer based voluntarily chooses to let the company spy on them.
Progressive has been by far the most aggressive in this arena with its Snapshot program. But State Farm and AllState are also doing similar discounts.
State Farm estimates its customers can save between 10% and 50% using their Drive Safe & Save with In-Drive program. Allstate, meanwhile, offers savings of up to 30% through their Drive Wise program depending on how you drive.
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According to The Wall Street Journal, insurers are able to hone in with absolute precision on your exact driving when that diagnostic port communicates with satellites and mobile data networks.
So far, these kinds of systems have been optional. But the big danger is that they’ll become coercive. By coercive I mean that insurers may say, “Well, you can choose not to have us track you, but we will charge a much higher base rate.” That’s the danger.
Still, there are uses for this technology that are invaluable. For example, we all know that teens are the most dangerous group of drivers. That’s why their insurance rates are sky high. Some teens may be very good behind the wheel while others may have the invincibility syndrome.
So pay-as-you-drive insurance can be helpful to parents and maybe even save a life by revealing dangerous driving habits. And if you have a careful teen driver at home, this can be used to save money.
But again, it is Big Brother monitoring you. You have to decide if the invasion of privacy is worth the savings.