Auto Insurance: Cut Your Bill by Installing This Device

Last Updated Feb 17, 2011 1:12 PM EST

Think you can cut your auto insurance bills because you're a safe driver and don't put a lot of miles on your car? Your insurance company may ask you to prove it. In a growing trend, insurance companies will cut premiums sharply for drivers willing to attach electronic devices to their cars to verify how far they drive each month and that they are not aggressive drivers. Some drivers are jumping at the chance for savings, but others see Big Brother overtones.

Could you benefit? That depends on how long and immutable your commute is. If you have options such as public transportation or working from home some days, it could save money not only on gas but on insurance. As for the safe driver part, it depends on the drivers covered by your policy. "This type of insurance will benefit a safe driver who falls into a high-risk category, says Caroll Lachnit, features editor at Edmunds.com. "For instance, teenagers who would normally face higher rates because of their perceived risk could save money by proving they are careful behind the wheel." Here's a sampling of the programs:

Mileage Measurement GMAC Insurance's low-mileage discount plan is a version for owners of General Motors cars who have OnStar service. OnStar, which also can alert an operator to call 911 in an emergency or remotely diagnose a car's mechanical problems, reports actual miles driven for subscribers who sign up for the insurance plan. Discounts are based on how much less than 15,000 miles you drive in a year, though there is no penalty for driving more. For instance, if you drive between 7,501 and 10,000 miles annually, you would save 26% or $208 if the starting premium were $800. GMAC says it has 30,000 low-mileage customers so far.

Mileage Plus Aggressive Driving The Snapshot program from Progressive Insurance has 100,000 customers and is available in 30 states (check this map to see if your state is one). With Snapshot, you plug in a device (at left) about the size of a garage door opener into your car's diagnostic port (often under the dash below the steering wheel). For 30 days, the gizmo sends data back to Progressive about how many miles you drive at what time of day and attempts to discern if you are an aggressive driver. (Lots of braking translates as aggressive since tailgaters hit their brakes a lot). After 30 days, Progressive will tell you, based on your mileage and driving habits, whether you qualify for a discount of up to 30%.

Mileage plus speed While other programs don't measure your speed, Allstate's DriveWise program doesn't shy away from that. Now in effect in Illinois, the plan will be rolled out to other states during this year. The device installed for DriveWise will note any time you exceed 80 mph. In addition to your mileage and episodes of hard braking and aggressive acceleration, Allstate says such speeding could affect your rating and your premium.

How should you decide if you want to try one of these programs? Think about these issues:

• Can you cut back your mileage? Will you really take the bus or car pool? And if you have just one car in the family, will a road trip balloon your mileage total?

• Will you really show up as a safe driver? According to surveys, 95 percent of Americans believe they are above-average drivers (it must be those other 5 percent who cause all the accidents). Do you tailgate? Switch lanes a lot? Speed up swiftly any chance you get? You might be among the self-deluding 45 percent. I mostly don't do those things, but I would not want to be worrying about whether I might touch 80 mph on a beautiful day on a wide-open Interstate.

• What discounts could you get and what does it take? Programs vary. Be sure you understand potential discounts and any possible penalties before you plug in that transmitting device or sign up for the OnStar program.

Privacy advocates worry that insurance companies will take the next step and see exactly what addresses you are visiting. Frequent visits to bars, for instance, might penalize you. Like the Facebook Places locator application, this is anathema to many. Company officials say they are not using the GPS function and can assess risk without it. Of course parents of teenagers may feel differently about the privacy issues. If so, there is an iPhone app that will alert you if your teen is speeding and show you where the car has been.

Photos courtesy of General Motors, Progressive Insurance

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    Jerry Edgerton, author of Car Shopping Made Easy, has been covering the car beat since Detroit companies dominated the U.S. market. The former car columnist for Money magazine and Washington correspondent for Business Week, Edgerton specializes in finding the best deals on wheels and offering advice on making your car last.

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