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Driving well for a fuller wallet
(by Corey Klein - August 20, 2008)
Would you let your car insurance company track your driving behavior if it meant a deep cut to your rate?
The option will be there for customers of Progressive Auto Insurance starting on Aug. 8 and while many driving advocates say it’s about time, some worry about the issue of privacy.
The device collects data such as the time when the device connects and disconnects from your car, the time when the engine is on and off, speed, acceleration and breaking. The device does not have a global positioning system (GPS) and it does not track speed, even though it can, according to Richard Hutchinson, who manages the "pay-as-you-drive" program.
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| Progressive Insurance drivers can now choose to put a device in their car that measures breaking, accelerating and number of miles driven. The program is optional and can save low usage drivers money. |
Drivers who drive fewer miles, take their time when accelerating and breaking and drive during daylight hours can reduce their liability and physical damage insurance by up to 60 percent. Conversely, drivers who drive more miles, accelerate and break quickly and drive during late night hours could see a nine-percent increase to these parts of their bills.
The pint-sized device is attached to a car’s onboard diagnostics port. Only cars dated 1996 or later are eligible for program, the year onboard diagnostics port became mandatory.
Customers can view the data collected on their driving at progressive.com. The company insists data collected is not shared with anyone unless it is demanded by a federal court. The data collected by the device is sent to Progressive through a transmitter that works like a cell phone.
Though the program can be canceled at any time, some customers do not feel all the information should be stored. "Privacy is one of the huge issues around this," said Hutchinson.
The National Motorists Association supports the program, according to Steve Carrellas, coordinator of its New Jersey Chapter, and has supported the "pay as you drive" concept for 20 years. Currently, auto insurance companies base rates on factors such as age, sex, type of car, educational attainment, credit score and, of course, driving record.
Basing insurance rates on number of miles driven makes sense, according to Carrellas, because the more you drive, the more likely you are to be in a car accident. "Miles driven is the best indicator of exposure and risk," he said.
The program has already been offered in Minnesota, Michigan and Oregon. About one-third of customers choose to use the device, according to Hutchinson. New Jersey will be the first state on the East Coast to offer the program.
New Jersey was chosen because the New Jersey Department of Banking and Insurance showed interest and the state has the highest auto insurance rates in the country. Drivers in other states have saved an average of 10 to 15 percent on their car insurance by using the device. "For a lot of consumers, this can be a significant savings," said Hutchinson.
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