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Would You Install a Device to Lower Your Insurance Premiums?

Posted By Jim On 03/26/2013 @ 7:10 am In Personal Finance | 27 Comments

I 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 [3])


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