How
quickly that day comes will depend on how many people allow insurance companies
to ride shotgun in the near future, since they can’t create scores unless they
can persuade us to share our driving data. To see how it felt, my wife and I
let State Farm keep an eye on us this summer.
State
Farm sent us a device that we plugged into a port under the steering wheel of
our 2003 Toyota Highlander. That was all we had to do to begin; the machine
wirelessly transmitted data about our movements to the company.
A few
weeks later, we started getting feedback in the form of a report card that
State Farm issues to customers participating in its Drive
Safe and Save program. The company assesses drivers in five
categories — acceleration, deceleration, turns, time of day and speed — with
grades ranging from A to C. (The company didn’t want to hurt anyone’s feelings
by flunking them.) The grades are then plugged into a formula that determines
discounts.
For
now, the company’s interest in a customer’s speed extends only to whether
you’re driving more than 80 miles per hour, and if so, for how long. We did
just a bit while in a 65 m.p.h. zone on the Massachusetts Turnpike and ended up
with an A-minus grade in that category. Our lead foot on the accelerator led to
our worst grade, a B-plus, in the acceleration category. The company has data
showing correlations between higher claims and repeated instances of increasing
speed more than 5 m.p.h. in less than a second. Our A-minus on deceleration
meant that we didn’t slow down by more than 10 m.p.h. in less than a second too
often, an indication that we weren’t slamming on the brakes much and were
probably paying decent attention to the road.
Our
A-minus on turns was a pleasant surprise given the number of curves we
encountered while driving on vacation, but the device can measure the G forces
exerted from each turn and we mostly passed muster there. Our only perfect
grade was in the time-of-day category, as we didn’t drive during rush hour and
we stay off the roads from midnight to 4 a.m. when the drunk and exhausted are
out in force.
Continue reading the main story
For our
above-average efforts, State Farm said we would have qualified for a 22 percent
annual discount on a policy with generous coverage limits in New Jersey if we
drove about 10,000 miles a year, reflecting a $190 discount off an initial $870
premium.
Over
all, participants in the program get an average of 10 to 15 percent off their
premium, and everyone gets at least something for playing along. At
Progressive’s Snapshot program, people who do qualify for the
discount tend to save an average of 10 to 15 percent. Some other companies
require you to keep the in-vehicle device for continuous monitoring (and
possible price adjustments later) and may make you pay a fee for it plus some
ancillary services; others ask you to send it back after six months but allow
for a retest later upon request.
At the
moment, State Farm and Progressive are not raising rates on people who sign up
for monitoring and prove to be terrible drivers. Participation is voluntary,
and Progressive, the early adopter in usage-based insurance, says that close to
15 percent of its customers are already enrolled.
Still,
as more people sign up, the standard rate will start to feel like a penalty for
those who decline to participate. And if all of the good drivers pile into the
programs and qualify for lower prices, the companies may eventually raise rates
on the holdouts. One bonus for parents who are on the fence: You can often use
an insurer’s usage-based insurance or related tracking programs to monitor your
teenager’s driving. And Safeco Insurance has an interesting twist, in which people who
have gotten speeding tickets or been in accidents can use a monitoring device
to requalify for the rate they had before the black mark went on their records.
Given
all these incentives, why might someone hold out?
First,
not every company offers a usage-based insurance policy. Our insurance company,
USAA, does not, although it has started a pilot program to
gather data. Geico has no program either, and a spokeswoman declined to comment
on the reason. Progressive, State Farm, Allstate and others have policies or
pilot programs, but people in certain states or who drive vehicles that are
incompatible with the companies’ hardware may not be able to sign up or may not
be able to share as much driving data.
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Mike Fields
8 September 2014
I usually travel
across the mexican border for different reasons, what I always do is get
BesteMex car insurance, I feel safe whenI have...
savanna
8 September 2014
I gotta say I did this
with Liberty Mutual for 90 days and was so pleased when I could take that
little bugger out. Really was like having...
Chris
26 August 2014
The new New York State emissions testing computers download the
odometer reading during your yearly test. I am sure that the insurance...
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But
privacy is the biggest concern. While the major players are not yet tracking
exact latitude or longitude, they would like to, and Progressive is testing it.
“A mile driven on a highway is safer than a mile on a city street with lots of
intersections, but in today’s world we don’t know which road you’re on,” said
Dave Pratt, general manager of usage-based insurance at Progressive. Some
customers are already asking for the company to track them in this way.
The
companies probably have little interest in who you’re visiting or patronizing
on any given day, but divorce lawyers and others may one day subpoena the
information if insurance companies store it. The data can work in drivers’
favor too, though; one Progressive customer used his driving data to prove that
he did not kill his infant daughter, who died of asphyxiation at her home. The
company can also pull the data if you think it might help you avoid fault when
you’re making a claim; so far, it is not doing this unless customers ask it to,
though it’s hard to imagine that insurance companies won’t eventually be
grabbing for the information while examining future claims.
Continue reading the main storyContinue reading the main story
For
those of us with no privacy concerns, it’s difficult to make a solid case
against usage-based insurance. For me, it turned driving into a game that could
yield real money through safer behavior. Progressive’s data already shows that
people learn to brake more gently within weeks of signing up; unlike with State
Farm, Progressive’s device beeps when you’re slowing down too fast. The
companies are betting that by giving safer drivers better deals, they will
retain them longer and make up for the discounts with fewer claims over time.
Plus, the front-runners in the industry will undoubtedly attract good drivers
from competitors that don’t offer the discounts, leaving the laggards with
potentially higher costs from those who remain.
The one
lingering worry is that possibility of a FICO-like driver score. The leading
companies in usage-based insurance say they want nothing of the sort. After
all, they have more data than their competitors, so why would they share i