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Old 06-29-2008, 04:55 PM   #1 (permalink)
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Would you let your car help you get cheaper car insurance?

Quote:
View: How Technology Can Help Trim Auto Insurance
Source: Wall Street Journal
posted with the TFP thread generator

How Technology Can Help Trim Auto Insurance
How Technology
Can Help Trim
Auto Insurance
Plans Cut Rates for Drivers
Who Use Devices That Track
Their Habits at the Wheel
By M.P. MCQUEEN
June 26, 2008; Page D1

For years, drivers paid less for auto insurance if they reported low mileage. Now, insurers are using high-tech devices to track customers' habits, and offering deep discounts to those who not only drive less, but also cautiously.

In the U.S., Progressive Corp. and GMAC Insurance, a unit of GMAC Financial Services, are the first and the largest companies to roll out this type of plan. At least two smaller companies, including Unigard Insurance Co. of Bellevue, Wash., a unit of QBE Insurance Group of Australia, also are poised to start similar ones soon. Companies in Canada and Italy also have programs, and Hartford Financial Services Group Inc. is testing the same technology in Connecticut.

Drivers who participate in these plans have devices installed in their cars that, depending on the technology used, can track the number of miles driven, the speed at which cars are driven and even how often and how hard the brakes are used. By allowing their habits behind the wheel to be monitored, drivers get lower insurance rates -- or pay higher premiums if they're lead-footed road hogs.

Usage-based insurance pricing would mean an estimated two-thirds of households would pay less in premiums than they do now, according to a report by the Hamilton Project at the Brookings Institution, a think tank. Researchers Jason Bordoff and Pascal Noel calculated average savings at about $270 per car, per year. Some analysts and insurers believe that after a slow start, usage-based insurance could take off now that higher gas prices are forcing consumers to drive less anyway.

Proponents of these plans say they also have the potential to help ease traffic tie-ups and reduce carbon emissions by rewarding customers for driving less. Fewer miles on the road also means fewer accidents -- and fewer claims for insurers. With pay-as-you-drive insurance, drivers in the U.S. would reduce their mileage by about 8%, with $51.5 billion in social benefits mostly from reduced congestion and accidents, according to the Hamilton Project.

Later this month, Progressive says it will re-launch and expand its program, formerly known as "TripSense." Currently available only in Michigan, Minnesota and Oregon, TripSense subscribers get a special device that plugs into their car's diagnostic port -- the place mechanics plug into when troubleshooting. The Progressive device, however, keeps track of when, how far, and at what speed the car is driven. Every six months, drivers must remove the device and upload stored information to a computer and send it to the company.

When Progressive's new usage-based program, known as "MyRate," is launched, the technology will require less driver effort. This program uses a telematic device, which gathers driver data and wirelessly transmits it over a cellphone network. Progressive says it will also track how often and how hard drivers brake and use the braking information when calculating rates. This system doesn't include a global positioning system, so it won't track a driver's whereabouts. Drivers get back a periodic report that tells them how many miles they've logged and other feedback about their driving habits. Based on the data, they'll receive discounts ranging as high as 60%, depending on the state.

Bad-Driving Surcharge

But the device could raise rates for some drivers. In some states where it's permitted by law, drivers would be assessed a 9% surcharge for logging excessive miles or driving at high speeds with hard braking, said Richard Hutchinson, a general manager for Progressive.

Progressive, which has 7.1 million auto policies in force nationally, says 34% of its customers in Michigan, Minnesota and Oregon who signed up via telephone or Internet (instead of their agent) have been choosing the usage-based programs since 2004. The new plan is expected to be available in six more states by the end of this year and will also be sold by independent agents, the company said.

Brandon Biniecki, a 23-year-old information-technology support technician in Monroe, Mich., says he signed up for Progressive's usage-based program in 2006 for his Chevy Cobalt, a compact car. He drives less than 18,000 miles a year and currently receives a 5% or 10% discount from the company every six months, he says. Mr. Biniecki says he doesn't mind being monitored in return for saving money, but admits he might not have signed up if a global positioning system, or GPS, was involved.

"That would be an invasion of privacy, with someone being able to know where I am at any given point in time," he says.

Other insurers include GPS in their monitoring devices. GMAC Insurance's Low-Mileage Discount Program with OnStar, which expanded to a total of 34 states last year, grants discounts to users of vehicles equipped with GM's GPS and communication systems. The company says that enrollments have increased 200% since last year, and that customer retention rates are higher for those using the device.

In order to receive a discount, the driver must subscribe to OnStar, which is generally free for the first 12 months to buyers of new GM cars, and costs $199 to $299 annually after that. New customers who agree to have odometer readings sent directly to GMAC Insurance will earn a 26% discount if they drive less than 15,000 miles annually. (Existing drivers earn discounts based on their actual mileage.) Even heavy drivers can still earn a 5% to 8% "safe driver" discount just for subscribing to the service. Low-mileage discounts increase in tiers as fewer miles are logged. For instance, someone who drives less than 2,500 miles a year can qualify for a 54% discount.

'I Didn't Believe It'

Don West, 74, a real-estate broker in Gresham, Ore., says he reluctantly switched his coverage to GMAC Insurance, leaving his longtime agent, a personal friend. Because he and his wife drove less than a combined 15,000 miles a year, their rate plummeted. Says Mr. West: "I was paying $2,000 a year in premiums for the Cadillac and the Hummer, and it dropped the premium the first year I was on GMAC to $886 dollars. I didn't believe it at first."

About 20,000 drivers currently participate in the GMAC low-mileage program with OnStar, says John O'Donnell, vice president of business development at GMAC Insurance, out of five million OnStar clients.

At this point, OnStar only relays odometer readings to GMAC Insurance, Mr. O'Donnell said. OnStar doesn't continuously track drivers' location and only pinpoints a car's whereabouts at certain times -- when the device is activated by a crash or the police receive a stolen-vehicle report, for example. "There is an opportunity to get other information, and as we do we will be able to correlate risk to actual driving behavior itself rather than more predictive factors," Mr. O'Donnell says.
The last trip out to Vegas, the car rental company had me sign a waiver telling me that they have GPS in the car and will monitor my speed and location. I was free to drive anywhere in California, Nevada, and Arizona. Anywhere else would breach my contract.

I didn't like the idea initially, I have heard of such tale many years ago for rental companies outside of NYC. This was the first time I had any experience with it. The major auto rental companies haven't applied such technology yet.

It bothered me initially, but then I started to think about how it would apply to me in the real world for my own car. Would I also be bothered? The short answer is no. I don't care if they see that I'm going to the grocery store, Home Depot, or my visit my aunt in NJ.

Here's what I do care about, I do care that they see I drive less than 8,000 miles a year, that's part of my contract with them. If I can get a policy that insures me for exactly what I drive, I'd rather pay that because I'm sure it would be less. If the policy could even be just within the tristate area and if I go outside of that jurisdiction I pay a little more.

What I'm wary of is if they look at the average speed and state that I'm a speeder instead of the fact that I generally go the speed that the flow of traffic is going. Suddenly my policy goes up because I've sped 10 times and that puts me into a higher risk category.

What do you think of such a technology? Beneficial? Despicable? too Big Brother?
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Old 06-29-2008, 06:05 PM   #2 (permalink)
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I don't care about an insurance/rental company knowing how far I drive or what speed, but where I go or when I'm driving is none of their business.
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Old 06-29-2008, 06:15 PM   #3 (permalink)
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No, I don't want to give them that information.
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Old 06-29-2008, 06:16 PM   #4 (permalink)
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I can understand why people would be wary of this sort of technology. Personally, I wouldn't mind having one installed in my car. I'm all for trying to get the best deal for my money, and who couldn't use a few extra bucks these days??

Even if they could theoretically track my location, I still don't think it'd bother me that much. I don't really lead that much of an exciting life, and I doubt it'd really be that exciting to anyone that my car goes to my office, gym, grocery store, and home. My gut feeling tells me that the insurance company would be restricted in revealing locations except by some sort of court order.

Bottom line, if this gets me a fairer deal on my insurance based on how much I actually drive, it sounds like a no-brainer to me. And if accidents go down because people aren't speeding as much, isn't that better for society and the environment?

If only health insurance could work like this...
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Old 06-29-2008, 06:25 PM   #5 (permalink)
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Sounds like it could be used to deny claims too which is probably the real reason they want people to use those things. They don't care about saving the consumer money, they just want to improve their bottom line. I don't want my driving habits dictated by an insurance company whether directly or indirectly. If the insurance companies really wanted to reduce claims and save people money, they should be going for more driver education instead of electronic monitoring devices.
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Old 06-29-2008, 06:25 PM   #6 (permalink)
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Braking information??? I live in NJ, the "Brake for Everything" state.

My insurance company already asks for annual mileage on each car-I don't want some satellite communicator to tell them otherwise. It used to ask for a daily mileage as well, primary usage, etc. Two or three times a year, I drive to Tennessee or North Carolina, usually at a high rate of speed(I've gotten the tickets to prove it ). By reporting every 6 months, those trips would jack up my average mileage...then it'd go down....then it'd go up again. I'd never know what my premium would be.
This is way too Big Brother for my tastes.
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Old 06-29-2008, 06:35 PM   #7 (permalink)
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I pretty much walk and or take the bus anymore but I don't like the sound of this- too big brother for my taste.
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Old 06-29-2008, 08:26 PM   #8 (permalink)
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On my electric car that I am building to go around town, it would be ok. There is nowhere 'bad' that I could go or do with it. And I will only drive 2000-3000 miles a year with it, and I wouldn't want to pay too much.

But my insurance rates are very low anyway. Would they be able to take the risk of offering me $70/6 month insurance instead of $120/6 month just for knowing how I drive?

The other gas car doesn't have OBD2, so I couldn't get it for that.

But I would be concerned with them tracking it to a bar and when I leave (I don't drink at bars though) see me brake hard, swerve, or get in an accident. I wonder if the police will be able to use this to track which bars are letting people drink and drive when they bust someone for DWI/DUI?
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Old 06-29-2008, 11:34 PM   #9 (permalink)
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I have a perfect driving record in my 5+ years of driving. I don't even get a stop over from the police before so I shouldn't be worried. But whether or not I have something to hide isn't the issue. The thought of being watched is a bit unnerving.
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Old 06-30-2008, 12:39 AM   #10 (permalink)
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my privacy is worth a few bucks, I'm tired of giving corporations so much information on our shopping habits, now they want our driving habits?

screw that.
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Old 07-01-2008, 05:31 AM   #11 (permalink)
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Hell no.

I'm a fairly skilled mountain driver, I am not a "good" driver.

I drive too fast, I drive too many miles, doing stupid stuff on a motorcycle is a good time to me.

I also have 1 accident in 30 years (damn black ice), and 2 tickets in the same period. The insurance companies can live with the info they have.
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Old 07-01-2008, 11:08 AM   #12 (permalink)
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For now, no thanks. If they start mandating this kind of thing, they can go fuck themselves.
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Old 07-01-2008, 11:28 AM   #13 (permalink)
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Quote:
Originally Posted by MSD
For now, no thanks. If they start mandating this kind of thing, they can go fuck themselves.
Seconded.
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Old 07-01-2008, 11:35 AM   #14 (permalink)
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I drive like a madman. There's no way I'd want my insurance company to see that.
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Old 07-01-2008, 01:46 PM   #15 (permalink)
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I would be reading the fine print VERY, VERY carefully before signing up for this.


Here's an article detailing some of the very creepy ways big companies are using/planning to use hi-tech to monitor and/or market (to) you.
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Old 07-01-2008, 03:07 PM   #16 (permalink)
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Quote:
Originally Posted by Sion
I would be reading the fine print VERY, VERY carefully before signing up for this.


Here's an article detailing some of the very creepy ways big companies are using/planning to use hi-tech to monitor and/or market (to) you.
it's such a secret article i can't find the link...
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Old 07-01-2008, 03:13 PM   #17 (permalink)
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My insurance would have to be free to even consider this. Sure, I'd drive absolutely perfect if I had this device and didn't have to pay insurance, and they would cover anything that happened to me, my passengers or my vehicle. If they want to charge me and have such a device installed I agree with other sentiments "go fuck yourself" would be my reply, and I would search for another insurance company that didn't have such a program.
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Old 07-02-2008, 04:27 AM   #18 (permalink)
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No thanks. I dislike auto insurance companies enough as it is... I don't need another reason.
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Old 07-02-2008, 06:49 AM   #19 (permalink)
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Quote:
Originally Posted by Cynthetiq
it's such a secret article i can't find the link...
Ha +1. Yeah lets see that link.
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Old 07-02-2008, 11:18 AM   #20 (permalink)
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Quote:
Originally Posted by Cynthetiq
it's such a secret article i can't find the link...
You've just witnessed how high-tech they are that they can pull the link without you even noticing it. I think they've snuck in and granted themselves 'Super Admin' status.
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Old 07-02-2008, 03:53 PM   #21 (permalink)
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Quote:
Originally Posted by MSD
For now, no thanks. If they start mandating this kind of thing, they can go fuck themselves.
it would be near impossible to implement it. how would you install monitoring devices on my 1966 volvo amazon? and even if they figured out a way what would stop me from simply ripping it out again?
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Old 07-02-2008, 06:47 PM   #22 (permalink)
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Quote:
Originally Posted by Cynthetiq
it's such a secret article i can't find the link...

I could SWEAR I put the link in my reply...


anyway, here it is: http://www.cracked.com/article_16434...ar-future.html
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