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Would You Install a Device to Lower Your Insurance Premiums?

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OdometerI recently received my annual automobile insurance bill from State Farm and they included an insert about their new Drive Safe & Save discount program. It’s an add-on to their low mileage driver discount program, which I joined. The program is simple – you get a discount of a set percentage based on how many miles you drive.

Sample mileage and associated annual premium discount in percent:

  • 500 miles – 45%
  • 3500 miles – 26%
  • 6000 miles – 19%
  • 8500 miles – 16%
  • 11000 miles – 11%
  • 13000 miles – 7%
  • 16000+ miles – 1%

How They Track

There are a variety of ways, some of which are built into the car itself. For example, a Ford, Lincoln, or Mercury vehicle equipped with SYNC’s Vehicle Health Report needs no device to track mileage. You simply print out the reports and send them to State Farm. If you don’t have SYNC, OnStar also send you monthly reports that you can send to State Farm. If you have neither, you can enroll in In-Drive, which uses a device attached to your vehicle computer, for that data.

In each case, you bear the subscription costs.

Is It Worth It?

If you already have SYNC or OnStar or In-Drive, it’s definitely worth it. You’re already paying for it so why not get a discount. Even if it’s just 1%, it’s better than 0%. In-Drive costs $6.99 for their base package ($5.99 if you sign up for a 6-month plan) and you can get immediate insurance discounts (because it’s like Lo-Jack, it offers vehicle tracking in the event of a theft).

At $71.88 a year, you can start to do the math. Guesstimate how many miles you drive and based on the table above, you should find out if the discount is worth the expense of the tracking. If you anticipate an 11% discount, it’s worth it if your annual premium is $653.45 or more. You can also try to value the other services (theft tracking, etc.) to see how much those are worth to you.

Our premiums are pretty low, $251.05 and $310.57 a year, in part because I don’t have a commute. We already get the low mileage discount (which accounts for part of the discount) on one car so joining this program, at least at $72 a year, doesn’t seem worth it from a discount perspective.

Are You Comfortable with Tracking?

I can see how one might be uncomfortable with a third party tracking the location of my car but I’d be OK with it. What appeals to me more is the data that the tracking might provide, as well as vehicle health and information like that. I know there are companies out there building devices that would help you track your own driving habits, without a third party being involved, so if I really wanted to I could just buy one of those devices. You can also view it as the insurance company subsidizing the gadget.

We won’t be taking advantage of this discount but it was interesting to read about it and research it. Would you do it if your insurance company offered it?

(Photo: garyhymes)

{ 27 comments, please add your thoughts now! }

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27 Responses to “Would You Install a Device to Lower Your Insurance Premiums?”

  1. Jose says:

    I am not at all comfortable with tracking. I would hate for my premiums to go up because I accelerate a little more aggressively than big brother would want me too. Or for going 4 miles an hour over the speed limit. I’m not sure if it would or not but why take the chance? Besides, I’m only willing to go so far to lower my rates, they are already lower that any of the commercial insurers can go with USAA.

    • Scott says:

      Jose, I think Progressive advertises (or did) that if you used this it could only lower your premiums if you drove slow enough, that they would not use it to increase your rates if you drove too fast.

  2. Scott says:

    I think this technology could actually be a big boon to lawyers in our state, Virginia, where police are not required to show you a radar reading if you ask to see it. This means they can “round up” or otherwise take some liberties with the speed they report to you with little to no consequence.

    Now, with these devices, you could walk into court, the police show that their radar was properly calibrated, you show that your speedometer was inspected and found to work just fine, you have a tracking report showing that you never exceeded X speed on the day in question, and it will prove beyond a doubt that the police fudged the numbers since that will be the only room for human error remaining.

    Not saying you will get out of a ticket, but with a case or two made public enough, police will have to be more honest (or Virginia will change the law).

  3. I don’t know how I feel about this one. There would have to be the opportunity for great savings and no rate increases for me to consider it. I’m afraid they’d find some reason to raise my rates.

    • Jim says:

      I personally wouldn’t be concerned about that because you can always disconnect it or cancel service. I try to avoid making decisions based on fear of the unknown because there’s too much unknown.

  4. I like the idea, and I’d sign up. The way I look at it, I’m subsidizing people who drive a lot of miles. In the context of all modern intrusions into privacy, I think this one is peanuts. You’re probably losing more ‘privacy units’ each time you do a Google search.

  5. Alice Walker says:

    The biggest thing to me is the tracking. I love the option to get the discount, and I really appreciate the way they are coming up with ideas to reward good drivers. Seems like a very basic economic idea to me, create incentives to encourage desirable behavior, but maybe that’ just because I was an economics major. Whether or not I do it, I still like the idea, just not quite as much as I like the one that gives you the discount for not getting in accidents, no tracking needed!

  6. Tony Lovasco says:

    Consenting to 3rd party tracking devices inside of private vehicles is insane.

    First, there’s the obvious risk of abuse from the 3rd party tracking companies. They might not do it now, but expect one day to see service contracts that make you consent to have your tracking info sold for advertising purposes. Moreover, even if the company itself respects your privacy, employees may not. Consider a disgruntled worker using your tracking info to know when you’re not at home, so he and his friends can loot your house.

    Then of course is the “big brother” government intrusion that always tends to follow from such technology. No thanks.

  7. admiral58 says:

    I would def want to track as long as there isn’t an extra fee for my car.

  8. John says:

    I see why they’re doing it, but to be honest it doesn’t make it fair, and no doubt there will be some scammers making money out of this somewhere down the line.

  9. Dwight says:

    Beware. Some insurance companies (like Progressive) will also track speeding and sudden acceleration/deceleration, which they could cite in raising premiums. What they can’t know is the cause of sudden acceleration/deceleration, such as accident avoidance. (That’s usually the reason, but no computer can replace human eyes.)

    • Steph says:

      Normally I would agree with you on this, however, if you have to slam on your breaks to avoid an accident, then you’re following the other car too closely.

      As for Progressive, they do track sudden stops, but they don’t know where you are so they can’t tell if you’re speeding. On the up side, they do increase your discount for driving below a certain speed (45 mph I think). Also, none of this behavior will increase your premium, you only have the chance of decreasing your rate.

  10. freeby50 says:

    I’m not concerned with the tracking. My wife and I don’t drive all that much so if our insurer offered this deal I’d be inclined to take it.
    My insurance company is not ‘Big Brother’ and they don’t care what day and time I go to the grocery store. Frankly I think the only real downside here is negative impact from poor driving habits. Honestly I think thats fair. By the way, if the government wanted to monitor us it wouldn’t enlist 2-3 out of the many auto insurance companies to get us to *voluntarily* install widgets in our cars. Thats a ridiculously ineffective and round about way to be a Big Brother. And no, theres no slippery slope here either.

    • Tony Lovasco says:

      I agree, the government isn’t likely instructing any of the insurance companies to use these monitoring devices. But once the devices are out there, they will most certainly take advantage of them being installed.

      As for the slippery slope argument — of course there’s a possibility of that. If these type of devices become more accepted and common, it would be trivial for the government to make them mandatory in all vehicles (probably using safety as an excuse), without fear of a public backlash.

  11. Mark says:

    Huh, when I signed up for the State Farm program it was just self-report, no special devices or 3rd party reports needed. I haven’t gotten a mileage request from them for a while though, so maybe I got bumped out of the program. In any event, I prefer a mileage-based option to Progressive’s option which installs a device with an accelerometer in it and they lower your premiums based on your average speed I guess?

  12. No. No. It just reminds me too much of Big Brother. So no.

  13. Jon says:

    I noticed that State Farm trade marked poor English: “Drive Safe and Save.” What happened to adverbs!

  14. Jennifer says:

    I actually got this for my car and the first year is free! I get a discount for hooking something simple up and the box came with a prepaid return lable. I simply marked this on my calendar one month before my free period ends I will send it back. As far as them knowing where I drive, I’m perfectly fine with them seeing that I use my car to drive to and from work. Someone mentioned they were concerned about employees knowing when you aren’t home and robbing the place; seems a bit silly to me. Just because I’m not home doesn’t mean someone else isn’t. In fact it is extremely rare for there not to be someone in our house. Also, if your vehicle is already equiped with OnStar or SYNC your vehicle might be able to be track even if you don’t activate the service. There are always untrustworthy people out there and if I’m going to be concerned with someone knowing where I am it would be with my cell phone provider. 🙂 I would encourage anyone who can get this for free to try it.

  15. Wilma says:

    I got that from State Farm too. I’m not paying for any of those services to try to save money. I don’t have speeding tickets, no DUI’s and no accidents. Those 3 things in themselves are enough in my opinion to get me a decent discount. I have to multi insure discount and the safe driver discount already. A couple more dollars off would be nice though.

  16. Shirley says:

    We also use State Farm but since we already get seven discounts I don’t think this would be of any great help.

  17. Shirley says:

    Really… honest! 🙂
    We have two vehicles and our homeowner’s insurance with them.

    CA Good Driver
    Dr Safety Record
    Multiple Autos
    Multiple Line
    Vehicle Safety
    Annual mileage

  18. If I was sure it would lower my premiums, then I would absolutely install a device.

  19. Steph says:

    I signed up with Progressive’s Snap Shot program and was given a 15% discount after the first 30 days. I ended up switching insurance policies because I got a higher overall discount with switching both my car & renter’s insurance, but I would have stuck with it if I hadn’t come across my new insurance agent.

    The program was rather unobtrusive and free! They sent a device that hooked into my car’s computer port and recorded my speed, time of driving, & any sudden stops/hard breaks. Since they didn’t know where I was, they couldn’t tell if I was speeding, and my premium could only decrease. I probably would have gotten an additional discount if I stuck with it for the full 6 months, but I didn’t think I could have shaved more than the $150/year discount I got by switching.

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