Is saving 30 percent on your car insurance enough to justify granting Big Brother access to your vehicle? That’s the question many consumers and industry analysts are asking, as more auto insurance companies offer new options that calculate premiums based on a person’s driving habits, rather than set variables such as age, gender, and past driving records.
Progressive insurance (the company with TV commercials starring "Flo," see photo) for example, introduced last year its Snapshot Pay As You Drive discount program, which allows drivers to save up to 30 percent on their premiums. The catch is that all insured cars must be fitted with devices that monitor driving habits, such as how fast an individual drives, how often they apply the brakes, and how many miles they drive a week. If a driver has a long daily commute, for example, the discount might be reduced or eliminated altogether. According to Progressive this is how the Snapshot program works:
- After drivers sign up for the Snapshot program, we send them a device that fits in the palm of their hand and plugs into the on-board diagnostic (OBD) port of their car. The device records and sends the driving data to us.
- After 30 days, customers will find out if they're eligible for a discount — up to 30 percent — based on their driving habits and will see that discount applied to their policy. People who drive less, in safer ways and during safer times of day are more likely to get a discount.
- At the end of the six-month policy term we determine the renewal discount and the customer returns the device to us.
- We may periodically check in with customers to get an updated picture of their driving by asking them to plug in the device again.
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