A New Way to Save Money on Car Insurance (Really)
Want a way to save money on auto insurance? Now there’s a new way.
But I would not recommend it.
Auto insurance rates are expected to rise this year, ending a streak of several years of modest decreases. I found that a little surprising, given that miles driven by US drivers is decreasing. In any case, if you find your bill going up, there’s a new way to bring it back down…just agree to be spied on.
Several insurers are offering drivers the option to decrease premiums by having their driving behavior tracked. Typically what happens is you agree to have a small device added to a computer port below your dashboard. Every so often, the insurance company downloads the information collected by the device and adjusts your premium based on how and how much you drove. Some of the devices track miles driven, average and top speeds driven, and how hard you apply the brakes. The idea is to pay more ‘granularly,’ based on your particular driving habits.
There are a couple of big insurers doing it:
- Progressive - their program is called MyRate
- GMAC Insurance - it coordinates with OnStar to run its program
Both companies assure you that your information is completely private. Sure. I would only recommend participating in these programs under one circumstance - you own an OnStar-equipped vehicle. If you do, you’re being monitored anyway. You might as well get a discount on your insurance for it.
The real problem I have with these programs is that right now they’re optional. But optional, successful trials have a way of becoming mandatory real soon. And I’m not in a hurry to have my every driving move monitored. This from a guy who drives approximately 50 miles a month and would surely benefit from participating in the program.
July 24th, 2008 at 5:59 pm
Cool idea. I also agree with your mention that optional things become mandatory. There are challenges for the company I would imagine too. Most people speed a fair amount. Believing this versus having data of exactly when and how much someone is speeding is not the same thing.
I can imagine lawyers trying to use the evidence that the person is careless and endangering others (when in fact they are doing what everyone does - but for most people we don’t have the data).
July 24th, 2008 at 7:24 pm
If I remember correctly, one interesting aspect of these programs is the participants had less accidents. So if more people submit to the tracking, does that mean there would be less accidents overall?
July 25th, 2008 at 6:31 am
@ Sean - I wouldn’t doubt it. But I’ll bet it’s just selection bias at work. People who are in accidents tend to be ones who speed (statistically speaking, of course). Those same people are unlikely to submit to monitoring of their speed.
@ CCIB - That very thing is happening with OnStar. The data collected by that system can be and is being used in courts.
July 26th, 2008 at 11:35 am
I’d think it would be an apples-to-apples comparison (before vs. after, same drivers), but I’ll have to double-check.
July 27th, 2008 at 12:43 pm
There is no way I would allow someone to monitor my driving. There would surely be something they could use against me in the future. I prefer to pay my current premiums and go about my normal driving habits.
August 12th, 2008 at 4:34 am
There are few other ways to save money on car insurance:
1. Make sure you get all discounts you qualify for.
2. Keep your driver’s record clean and up-to-date.
3. Adjust your coverage to assume more risk.
4. Drive a “low profile” car equipped with certain money-saving safety features.
5. Shop around for a good, low cost insurance provider.