Installing Monitors in Cars Could Lower Insurance Rates

While the NHTSA is pushing Electronic Data Recorders (EDR) for all vehicles to increase driver safety (CarInsuranceCalculator.info reported), over the course of the past year, several automobile insurance companies have devised a method that will help drivers lower their premiums by recognizing positive driving habits. Customers who avoid driving recklessly and obey speed limits can see a decrease in their yearly premiums by almost 10%. This is obviously up to the insurance carrier’s discretion but lower rates never fail to pique interest. The only thing one would have to do would be install a device within their car monitoring daily driving habits. The device however, seems less intrusive as the EDR solution or the classic Par As You Drive insurance option.

What kind of monitor is this?

This device that is installed in cars is small. Once it is installed in a car, it is linked with the car’s computer system. If your car does not have a computer system, this device cannot be installed. The device is able to record driving habits and particularly picks up on negative things such as hard breaking and driving over the speed limit. There is not a tracking device in these small monitors so the worry that individuals can be tracked at all times is erased. Positive driving is rewarded with lower premiums and negative driving that is recorded does not affect rates.

When did this start?

The idea of “user based insurance” started in the 1990’s. Based on information collected for a New York Times article, Progressive was the leader for this technology. It started in Houston, Texas. Today, there are several large insurers that offer a similar product. According to that same article, “ Drivewise from Allstate is in 10 states; Drive Safe and Save, from State Farm, is in 16, with 11 more to be added next month; and Snapshot, from Progressive, is in 43.” The idea is beginning to gain popularity.

How does it work?

To be a participant, a consumer must have his or insurance though a company that offers this option. It is also important to remember that this is exactly what the monitor is, optional. If someone is happy with their current rates, the insurance company cannot force them to install this device into the car. Different companies have different methods. Progressive will collect date from the device for a time period of 6 months and then do a reading to analyze the data that was gathered during that time. Customer can cancel at any time so there is no need to worry about getting stuck in a contract. Another example is Allstate’s Drivewise, which allows the consumer to monitor his or her driving habits by creating an online account and then viewing statistics on their driving habits. This could lead to a higher self-awareness of on road skills. State Farm has taken this device to the next level by combining driver monitoring with in car communication. Based on Consumer Reports’ Cars Blog writer Paul Eng, “Together, the add-ons allow drivers to access emergency roadside assistance, vehicle diagnostics, and maintenance reminders.” Some services are free while others can cost a small fee. It is worth it to check with your personal vehicle insurance company to see if this type of service is offered and if there is a price associated with the product.

Will My Insurance Premiums Go Down?

The entire reason for creating a device such as this was to reward drivers that had positive driving habits. So, if this device is placed in your car and the standard driving rules are obeyed, insurance premiums can be lower. Some companies claim that rates can be lowered by up to 30 percent but surveys find that overall, the average amount a person’s premiums go down by is around 10 percent. Every dollar counts during this economy and with the comfort that a company is not tracking its customers, more people tend to gravitate towards this solution as a way to lower rates. If a person does not brake hard, avoids fast driving, and also driving during high risk times, such as late at night, insurance premiums will go down. On the other hand, if a customer has the monitor installed in his or her car and brakes hard, drives fast and very late at night, this information will be recorded but that customer will not be penalized.

The Pros & Cons

Installing this monitor is not an invasive procedure and the device is very small. In that aspect, the device will not disturb the driver. In a report conducted by ABC news, one driver stated that she was able to save almost $100/year on premiums by having the monitor installed in her car. She claimed that it made her aware of certain driving patterns she had not been aware of before. Customers may think if they are a good driver then they should have nothing to worry about and in a national survey conducted by Allstate, two thirds of those polled thought they were excellent or very good drivers. Once data is gathered by this monitor, some individuals may have a hard time facing the bar graphs showing the number of times they braked hard at that red light. Also, it’s important to remember this information can be used in court if a driver is involved in an accident and there are arguments that it does not accurately portray a person’s consistent driving profile.

If you are looking to

lower your rates and consider yourself a truly safe driver, this may be one option to look into. Always be sure to investigate anything that is gathering information from you and make sure that it is the best decision for your insurance needs.