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Using Technology to Lower Your Auto Insurance RatesBy Floyd Arthur
Many insurance companies across the United States are
offering customers an
interesting deal: Lower your auto insurance rates by
allowing your insurer to install a
tracking device in your car. Using the science of telematics,
which combines wireless
technologies with sophisticated computer algorithms, the
devices monitor mileage and
driver behaviors, such as the times of day a person drives, his speed,
and how often he
slams on the brakes. For drivers who meet certain
criteria, the device can mean
significantly lower
auto insurance rates.
Auto Insurance Rates
An array of tracking devices are being offered by various insurers.
Progressive’s gadget,
called Snapshot, tracks mileage, driving times and braking
behavior. The device costs
the company about $100, but Progressive provides it to drivers
free of charge. According
to Progressive, about 70 percent of customers who
use it qualify for some kind of
discount--typically about $150 per year. The company says that
it will not use the data it
obtains to increase a customer’s rates.
Allstate offers a more sophisticated device, which tracks not only
mileage and driving
times but also detects when the car exceeds 80 miles per hour, while State Farm goes
one step further and uses GPS to track where the car is garaged.
Newer devices use a
smartphone app to do the tracking without installing
anything at all. In the United
Kingdom, where about 20 percent of all auto insurance
policies are telematics-based, an
app called Marmalade is already available for families with teens
who are learning to drive.
Sacrificing Privacy for Lower
Auto Insurance Rates?
According to the insurance industry, customers who install tracking devices in their cars
have nothing to lose and everything to gain. In fact, they claim, installing a device gives
a driver with limited experience or a less-than-perfect driving record a
way to prove to
his insurer that his driving habits are sound. As smartphone
applications become the norm,
instant feedback may also help drivers with bad habits to correct
risky behaviors as they occur.
Nevertheless, digital privacy advocates say the tracking
technology has the to potential
to intrude on individual privacy in as yet unknown ways, such as listening to
conversations and monitoring where a driver goes. Further,
they say, there is no
guarantee that the insurance industry will not use the
information it gathers to increase
rather than decrease
a driver’s rates.
Nor are the majority of U.S.consumers excited about
telematics-based insurance--at
least not yet. According to a 2014 survey of a representative
sample of 2,200 U.S. drivers
conducted by Deloitte, about 50 percent of Americans are not interested in trying such a
device. Of those who said they would consider it, only about 25 percent said they would do so
unequivocally. The other 25 percent said it would depend on the size of
the discount they received.
Is Telematics-Based Insurance the Wave of the
Future?
According to a number of insurance industry experts,
telematics-based insurance is here
to stay. In fact, says Deloitte, consumers who choose to
opt-out of such programs may
one day find themselves assigned to a “special risk” category of
drivers who pay higher
premiums simply because they do not allow themselves to be tracked. “The genie is out
of the bottle,” the consulting firm said in its report. “The industry as
a whole is not likely
to go back to relying only on its traditional methods of
assessing auto risks.”
Whether you are thinking about telematics-based insurance or are
satisfied with the
status-quo, it’s always a good time to shop for lower auto
insurance rates. Our
experienced agents are available to help you select the coverage
you need at a price point
that’s right for you. Just call our office at 516-292-2780
any weekday between 9 a.m.
and 6 p.m. to schedule an
appointment, or request a free consultation online
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