Does Your Insurance Company Want You to Use a Tracking Device?

Many insurance companies now offer discounts for driving safely, and they're going well beyond things like looking at driving records, vehicle theft rates, and parking arrangements. Insurance companies are now offering a computer chip, or tracking device, that can be installed directly in a customer's car, and report data back to the insurer. Progressive was one of the first insurers to introduce the concept of installing tracking devices into driver's vehicles, and State Farm now offers a similar program. The devices measure a driver's safety habits, such as speeding or slamming on the brakes, and also keeps track of vehicle mileage and the times of day the car is driven.

In Progressive's tracking device program, safe and/or infrequent drivers are rewarded with lower rates, up to 15% lower than their peers. Progressive now markets its tracking-device discount as the Snapshot program; its previous names include TripSense and MyRate. The Progressive Snapshot program requires drivers to keep the device installed for at least six months. During this six-month period, Progressive takes a snapshot of a drivers' habits and adjusts rates accordingly. Safe drivers can expect a reduction in their premium.

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According to Progressive, more than a quarter million drivers have used the Snapshot tracking device. And, Progressive offers a few reassuring words for drivers who may be creeped out by the Orwellian aspects of insurance company surveillance. First Progressive says that drivers won't be punished for driving at risky times, speeding, or excessive acceleration and braking. And second, Progressive reminds its customers that the Snapshot device only measures aggregate data. For example, the Progressive insurance tracking device may record that a car is going 60 miles per hour, but it does not record if the car is on a freeway or a residential street.

Not to be outdone, another leading insurance company is promoting a like-minded program, and it goes a bit further. State Farm's In-Drive program shares many features with Progressive's Snapshot program, with an important digital feature. In-Drive can be integrated with safety and GPS features, not unlike General Motors' OnStar service. In-Drive Guardian provides assistance in the event of accidents or breakdowns, and can provide general diagnostic services. In-Drive Co-Pilot integrates with GPS to provide navigation services. Although the driver's location currently doesn't impact insurance savings, it's easy to speculate that this could be part of an insurance safety device program in the future.

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Both Progressive's and State Farm's insurance tracking device programs are entirely optional, and participation is completely the driver's choice. Consumer privacy advocates are concerned that insurers may be tempted to sell drivers' data, but Progressive and State Farm have said they won't use driver information unless required to do so by law, or if it is needed to resolve an insurance claim. Some auto industry and public policy pundits believe that similar devices may one day be mandated by the government and used to determine taxes for gasoline use or environmental impact.