Auto insurance companies would really like to know how well you
drive on a daily basis. Usage-based insurance (UBI) products let
them monitor your driving in exchange for offering you potentially
The tracking devices typically used for UBI policies tell them
when you go out, how far you drive, how much and how hard you
brake, and how rapidly you accelerate.
If you agree to use such devices, you could be eligible for
discounts of up to 30 percent on your
car insurance rates
Currently, about 1 percent of drivers benefit from some form of
UBI, says Bob Mathe, president of Evogi, which designs and
engineers telematics solutions for insurers. In five years, that
number could be as high as 20 percent, predicts Mathe. By 2020, it
could be as high as 30 percent.
In fact, insurers that have just begun thinking about
telematics-based pricing are way behind, says Mark Hill, senior
manager of Deloitte Consulting.
Not only are they behind, but they also run the risk of losing
their customers to early adopters that are rewarding their
policyholders for safe driving, says, Stephen Packard, director of
Drivers willingly participate
Drivers don't seem to mind giving up their personal information
as much as you might expect. "Many consumers feel the discounts
more than offset the loss of privacy," Packard says.
In recent surveys, Towers Watson, global professional services
company, found that more than 80 percent of drivers are willing to
install tracking devices for the benefit of a discount, says
director Robin Harbage.
It could be that in today's world, people are used to
relinquishing their privacy, Mathe says. Many smartphones today
gather and store all of the same information kept by telematics
devices installed in a car, he says.
Between Facebook and location-based social apps like FourSquare,
"more and more people are sharing their intimate information all
the time," Harbage says. And they think nothing of it.
No device, no insurance?
Could there come a day when auto insurers require you to have a
telematics tracking device in your car?
Yes and no, Mathe says. Someday all
companies will require actual verified mileage to price car
insurance, he predicts. However, he adds, "I don't believe even
though the information is available from your car [that] you ever
will be required to share the specifics of your personal location
to get insurance."
But your car insurance company may wonder why you are unwilling
to let them see how you drive, Packard says. And there will always
be some drivers who refuse - but they may end up paying higher
premiums for their refusal to be tracked.
Usage-based insurance offerings
If you're interested in usage-based insurance that uses a
tracking device, your car must have been built in 1996 or later.
Here are some currently available UBI options:
, is available in three states (Arizona, Illinois and Ohio) and is
expanding to additional states this year. Drive Wise participants
plug a small telematics device in their vehicle that records and
scores their driving habits. During the first policy term, Drive
Wise customers are rewarded with a 10 percent discount. During
subsequent policy terms, drivers with the safest driving scores and
lowest mileage can earn savings up to 30 percent.
American Family Insurance
recently completed a pilot usage-based insurance program. "We are
assessing the results," says spokesperson Steve Witmer. "It's
likely we will move forward by offering a program to our
working with the wireless carrier
recently launched usage-based insurance in Texas. Drivers are
eligible for discounts of up to 30 percent based on driving habits,
which are recorded with the use of a device that plugs into the
car's diagnostic port. The information is carried over the wireless
network. Sprint and Esurance also have a pilot program for
policyholders in Arizona.
was among the first to offer discounts to drivers who install
devices that monitor their speeding habits, braking patterns and
time of day driving. GMAC uses OnStar to gather data. Discounts
range from 54 percent to those who drive less than 2,500 miles a
year to 13 percent for drivers who log up to 15,000 miles a year.
It is offered to policyholders in 35 states.
and Octo USA Inc. have partnered to offer drivers a usage-based
program, TrueLane. Drivers install a small device in their car's
diagnostic port. The device records the vehicle identification
number, time of day, speed and location. The information is
transmitted to The Hartford via Octo's services over a cellular
network. When you enroll, you receive a 5 percent discount. After a
minimum of 75 driving days, you may receive a discount of up to 25
percent, depending on your driving habits. TrueLane is available in
five states (Connecticut, Minnesota, Missouri, Oregon and West
Virginia) and is expanding to more.
pay-as-you-go driver discount program, Snapshot, is available in
all states except Alaska, California, Hawaii, Illinois, Indiana,
North Carolina, Tennessee and Washington. Drivers who enroll are
mailed a tracking device to install on their cars. After using it
for 30 days, they can see what discounts they're eligible for based
on their driving habits. Discounts can be up to 30 percent.
Policyholders must stay plugged in for five more months to get
their ongoing renewal discount. You can even try Snapshot for 30
days without being a Progressive customer.
launched a usage-based program late last year called IntelliDrive.
It's available in four states (Illinois, Ohio, Oregon and Virginia)
and will be expanding. Drivers who install a tracking device
receive an immediate discount of up to 5 percent. At renewal,
drivers can receive additional discounts of up to 20 percent
depending on their driving habits and state regulations.
, a subsidiary of Liberty Mutual, has a UBI program for drivers who
have received a traffic ticket or caused an accident but want to
avoid higher rates. Drivers with violations or accidents can sign
up for Rewind and will be given a device to install in their cars
that will monitor behavior behind the wheel -- including their
car's mileage, speed, acceleration and location. After four months,
drivers who prove they are responsible can have any surcharges as a
result of the incidents waived. Rewind is not available
is offering a Drive Safe & Save program to drivers with an
active subscription to OnStar. OnStar is built into more than 30 GM
models but can be added to any vehicle. State Farm requests
odometer information from OnStar every 30 days after you enroll.
After six months, State Farm will adjust your premium to reflect
your usage. Most drivers should see a reduction. Discounts range
from 10 to 50 percent depending on how safely you drive, when you
drive and how much you drive. The program is available in 14
states: Alabama, California, Colorado, Florida, Georgia, Illinois,
Indiana, Michigan, Minnesota, Ohio, Pennsylvania, Texas, Utah and