State Farm has teamed up with a telematics company to offer its
auto insurance customers in-vehicle communications systems and a
chance to get discounts on
car insurance rates
The joint effort called In-Drive will use technology developed
by Atlanta-based Hughes Telematics Inc. State Farm will begin
offering the optional service to customers in Illinois in September
and possibly other states next year.
The technology's features are similar to those provided by OnStar,
the subscription-based service that General Motors started building
into its vehicles 15 years ago.
State Farm already has partnered with OnStar in five states,
including Illinois, to offer a mileage and driving
performance-based discount program called Drive Safe & Save.
Until now, drivers must have OnStar equipment and subscriptions to
participate, except in California where they can choose to
self-report mileage. Data collected by the OnStar system is
transmitted to State Farm, and drivers can get discounts for low
mileage and good driving habits.
The new venture with Hughes Telematics opens the opportunity to
State Farm customers who don't have OnStar.
The program will provide
customers with a telematics device about the size of a cell phone,
which plugs into the vehicle's diagnostic port, typically located
under the steering wheel. The technology provides a host of safety
and diagnostic features and includes tracking capability. The
system works with most vehicles built after 1995.
Options include ability to follow family members' driving
Three subscription-based services will be offered through State
Farm. A basic package will be free for six months after a $10
activation fee, and other packages will range from $5 a month to
$14.99 a month, plus tax. The basic package includes maintenance
and service reminders, engine diagnostics, information on the
vehicle's carbon footprint, driver behavior tips and stolen-vehicle
Expanded packages include emergency roadside assistance and
greater diagnostic capability. There will also be features that
allow drivers to monitor other family members' driving habits.
"You can add location alerts to let you know if the vehicle is
taken out of a geographic area," says State Farm spokesperson Missy
Lundberg. "You can also sign up for text and e-mail alerts if the
car passes designated speed limits."
In other words, you can find out if your 16-year-old goes 50
miles per hour in a school zone or drives to the next town when
he's supposed to be at the library.
The telematics device also tracks mileage, turns, acceleration,
braking, speed and the time of day a vehicle is operated. It
reports the data to State Farm.
State Farm says
customers who sign up for the voluntary program can save about 10
percent on liability, medical payments, collision and comprehensive
coverage initially, and up to 50 percent at renewal time, depending
on how safely and how many miles they drive. Lower mileage and
safer driving translates into lower car insurance rates. If you
drive the national average of 12,000 miles a year, you can save
between 3 percent and 20 percent, according to the insurer.
Can State Farm change the way America drives?
The joint effort is the first deal of its kind in the insurance
industry. State Farm is the largest auto insurer in the nation, and
other insurers could follow its lead.
Eric Berkobin, Hughes' vice president of engineering and general
manager of aftermarket products, said the venture with State Farm
was a great opportunity for his company.
"This type of program is new to the market and has the potential
to change the way America drives," he says. "Our In-Drive solution
will empower drivers with comprehensive information to improve
their driving habits, while also offering features that help them
care for their vehicles and stay safe on the road."
Lundberg declined to disclose where the auto insurance company
plans to expand the In-Drive service after the pilot project in