Do you mind being tracked to save on auto insurance?

A new type of discount is now available to customers of Progressive when they put a tracker in their vehicles known as Snapshot. The tracker is plugged into the car’s computer and provides accurate data about braking, speed, and miles driven. There is another system known as Onboard Advisor offered through Liberty Mutual but is only available to commercial auto fleets.   

The information gathered is very precise – from how many miles you drive to the time of the day, and times you brake hard. This allows the insurance company to take a closer look at your driving habits and determine whether you are a risky driver or not. If you are a bad driver, you may not fall for this deal.  However, if Snapshot shows you have made significant improvement and did not get into an accident during the time the device was used, that is three to six months, your policy premium may go down. If Snapshot shows you are not such a good driver, you’ll go back to paying the premium you were paying before.

While the system doesn’t have GPS, some people may be reluctant to using this device because they believe is not as reliable as it seems. Progressive says you can opt-out whenever you want, and the data collected is not used to determine rates. But how do you know? Also, the pool from various drivers will provide better-localized information, and your insurance will go up if your neighbors are bad drivers.

How does it work? You may ask. Your insurance company sends you either a smart tag you can attach to your vehicle’s windshield that pairs with your phone via Bluetooth and transfers your driving information to your carrier. You can instead use a dongle that does the same by plugging it in your car. When you are driving, the system will transfer your ride to your insurance provider, including mileage, speed, braking, and acceleration. Your insurer will provide you with feedback and your driving score. Phone usage may also be included to make drivers more aware of their behavior.

In a recent study by the journal of marketing Science, they found out that over approximately 21% of drivers using these programs reduced braking after six months of usage. Young divers improved more than older drivers, and women had a higher improvement percentage than men.

There are some benefits to the innovation, but also some risks. This data must be handled right, and auto insurance prices must be transparent.  If you already have a good discount, this may not be such a good idea. So far, drivers in Connecticut seem to get the best discounts on their policies with an average yearly discount of $102 – the median in other states is $46.

So, is 30% worth reporting your driving to your auto insurer? Would you be willing to be tracked to save some? Progressive says 2 out of 10 drivers in its Snapshot get higher rates due to high-risk driving.