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 RatesAn 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

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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

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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   now.

Visit www.CarmoonGroup.com and get a FREE 30-Minute Consultation today!

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