Those that sign up for the optional program get a first-term discount of 10%, though after the system has recorded their information through that period, their rates could decrease as much as 60%, depending on how and how much they use their cars. Drivers that ‘jack-rabbit’ away from stoplights and slam on their brakes frequently, however, could face rate hikes of up to 9%, reports The Detroit News.
"We want people to know that the program is not right for everyone," said Richard Hutchinson, a Progressive general manager. "It's for people who drive at low-risk times of day and who keep alert for others on the road. They don't make fast lane changes or follow too closely behind other drivers so they don't have to overreact or slam on the brakes."
Original: Technology's ever-advancing march into the automotive field is taking an interesting, and possibly ominous, turn. Insurance companies are using technology like GM's OnStar to track distance, speed and manner of driving. 'Good' drivers - that is, those that drive slowly and little - are rewarded with lower premiums, while drivers that spend many miles on the road or traveling at high speed end up paying more.
The technology is at this point voluntary. The first two major U.S. insurance companies to use the devices are Progressive, which has had the program available on an opt-in basis since 2004, and GMAC Insurance. Other companies in places like Italy, Canada and Australia are already using the devices, or will soon start, reports The Wall Street Journal. The devices are capable of measure many of the intimate details of a car's use, including accelerator position, speed and braking frequency and pressure, in addition to miles driven and many other data points.
Insurers hope to use the technology to introduce usage-based insurance pricing, which the companies claim would lead to lower premiums for two-thirds of American households. That would also result in a correspondingly large increase in the premiums of the remaining one-third, however.
Environmental and traffic advocates see the system as a way of providing an incentive to drive less - save the planet, and the commute time by saving on your insurance premium. Modeling by these advocates indicates usage-based insurance could lower total vehicle miles by as much as 8% per year, reducing traffic, accidents and fuel consumption along the way.
The flip side of the coin reveals a 9% surcharge for drivers that travel distances the insurance companies deem 'excessive'. The loss of privacy is also a concern. Progressive's system operates much like a flight recorder, taking down data from the car's computer, but not logging any GPS or location data. GMAC's system, on the other hand, relies on a subscription to GM's OnStar service.
Those worried about the Big Brother aspects of the otherwise attractive reduced payments that could come with a pay-as-you-go car insurance plan can breathe a little easier as GMAC guarantees that the only information collected for the program by the OnStar device is an email containing the car's odometer reading. The odometer reading itself is forwarded from the OnStar system's monthly diagnostic email, so in reality no additional information is collected at all, it's just distributed to GMAC Insurance as well.
The news may clarify the role of GM's OnStar device in the program, but other systems used by insurance companies do in fact record GPS data, and that factor has been a deterrent in their adoption. Perhaps if more insurance companies find a way to get the information they need in relatively unobtrusive ways, the rising price of fuel will help push more drivers to adopt the metered insurance plans as they cut their driving distances to save at the pump
Reader Comments
Fri Jun 27 2008 6:00 AM
HECTOR says
This cannot lead to anything good. It's the old *if you had nothing to hide you wouldn't mind us snooping around*.
And it seems in some not too distant future it will be up to an insurance company to determine how much I drive may be excessive.
I am one of those people that believe the government is the problem and not the solution but in this case I would favor legislation to nip this kind of abuse in the bud. And while they're at it they can make it illegal to use my car's data recorder against me.
Either they do this or we motorists are headed down a very dark, dark path, one littered with insurance companies and trial lawyers ready to eat us alive.
Fri Jun 27 2008 7:10 AM
Alan says
Big brother is watching
Fri Jun 27 2008 9:59 AM
Gus says
It's already happening, Hector.
Many crash cases have the computer's final seconds of speed and braking as evidence now.
It's just a matter of time now...
Fri Jun 27 2008 10:00 AM
Stephen says
Whats worse is that, we don't really have any rights to negate what would be PRIVATE COMPANIES spying on us. I'm not saying having the government do it would be any better but it could be challenged in court, when its a private company it would be very tricky. Whats next cops can just send a ticket to our cars' computer and print it out every time we speed? I mean hell speed cameras are bad enough, it makes so that cops don't have to do their jobs. I mean most criminals are caught during routine traffics stops, now there are no routine traffic stops, just a ticket mailed to your house wither or not you were the one driving the car. It just seems like things are getting worse before they get better. I can only hope that when the public gets wind of GM allowing this people we respond by not buying their cars and that might change GM's position issue (considering they really can't afford anymore losses).
Thu Jul 3 2008 6:03 AM
raptor says
Yeah, gathers only mileage data. For now.
Thu Jul 3 2008 8:54 AM
Guy says
While the first year's subscription to On-Star is free (in a new GM car), the subsequent annual charge is exhorbitant and will probably nullify any savings from a reduced premium.
Tue Jul 29 2008 3:24 PM
Gus says
I drive very carefully, I've only had one accident in my entire life, and that was a drunk driver hitting me.
However, on a drive through backroads in the middle of nowhere, sometimes I like to push my car a little, even then within the speed limits. But if I had a Prius, I guess I'd be ok with this, since you never have any fun driving those anyways...
Wed Jul 30 2008 8:13 AM
Jim says
It would be interesting to see Progressives rate profiles to see exactly what you would be saving. A 10% discount (which I suspect will be the real world maximum discount) wouldn't be that much. Also is it applied to your total cost of insurance or only to the liability portion?
Wed Jul 30 2008 2:24 PM
JAPenguin says
This is a nightmare. Whatever one's driving habits, the idea of an insurance company surreptitiously opening the door to your automobile under the guise of a discount on insurance costs certainly marks the beginning of a slippery slope that cannot possibly lead to positive results. No amount of monetary savings on insurance is worth opening this Pandora's box.
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