Control car insurance costs: Pay as you drive | Insure.com
`
`Page 1 of 7
`
`
`
`En Español
`
`Savings Alerts
`
`Your email address here
`
`
`
`
`Prefer to talk to someone? Call a licensed agent: 1-855-430-7748
`
` Home
` Life Insurance
` Car Insurance
` Health Insurance
` Home Insurance
` Other Insurance
`Search Insure.com
`
`
`
`
`
`Home > Car Insurance > Control your own car insurance costs: Pay as you drive
`Car Insurance Quotes
`
`Find Affordable Auto Insurance
`
`Zip Code
`
`Zip Code:
`Are you currently insured?:
` Yes
` No
`
`
`
`
`
`
`
`Retrieve My Quotes
`Control your own car insurance costs: Pay as
`you drive
`
`By Amy Danise, Insure.com - Last updated: May 29, 2009
`
`If you don't put many miles on your car, the insurance industry has plans for you to save money on your
`car insurance.
`
`[Let Insure.com help you find affordable car insurance now.]
`
`http://www.insure.com/car-insurance/usage-based.html
`
`2/21/2013
`
`

`

`Control car insurance costs: Pay as you drive | Insure.com
`
`Page 2 of 7
`
`
`
`Car insurers have long offered low-mileage discounts based on your commuting distance to work and/or
`annual mileage. Now they're considering ways for you to pay for car insurance based on exactly how
`much you drive. It's called usage-based car insurance, also known as "pay as you drive" or PAYD. A
`device in your car tracks your actual mileage and, come renewal time, your car insurance price is partly
`calculated based on your usage — and potentially even your driving habits and aggressiveness on the
`road.
`
`Some insurers have been working toward this moment for years. Progressive, for example, has been
`testing and refining usage-based programs since a 1999 Texas test. "We put our toe in the water," says
`Richard Hutchinson, General Manager of Progressive's MyRate program, the newest incarnation of
`Progressive's pay-as-you-drive insurance program.
`
`With MyRate, Progressive is going full throttle into usage-based insurance. The program is currently
`available in Alabama, Georgia, Kansas, Kentucky, Louisiana, Maryland, Michigan, Minnesota,
`Missouri, New Jersey and Oregon. The company plans to offer it in additional states throughout the
`year.
`
`Here's how it works: A device that plugs in under your steering column collects data on your mileage,
`when you drive, how often you drive and how you drive. Data is sent automatically to Progressive from
`the device via a cellular connection. Conventional factors such as your age, location, vehicle and driving
`record are still used in addition to usage in setting your car insurance premium.
`
`"This empowers you to control your insurance costs," says Hutchinson.
`Savings can go as deep as 25 percent or more on the liability and
`property-damage portion of your insurance bill. However, it could also
`backfire: Someone who logs a lot of miles, or who drives like a crazy
`person, or who drives a lot after midnight (a high accident-rate time),
`could see a 9 percent surcharge.
`
`David Snyder, Vice President of the American Insurance Association,
`an industry trade group, notes that insurers have long based rates partly
`on miles driven, but one driver's miles can be very different from
`another's in terms of risk exposure. For example, 10 miles driven on a
`back road at midnight carry far more risk than 10 miles driven on the
`highway on a sunny day. Tracking devices pinpoint some of this risk.
`
`Road ragers need not apply. Sudden braking and acceleration, such as
`
`The rocky road to
`pay-as-you-drive insurance
`
`There are three main hurdles
`to changing the face of car
`insurance to pay-as-you-
`drive, according to insurers:
`
`Technology
`
`First, technology must
`support the idea. A device to
`track driving is needed and
`devices vary among
`insurance companies. It must
`
`http://www.insure.com/car-insurance/usage-based.html
`
`2/21/2013
`
`

`

`Control car insurance costs: Pay as you drive | Insure.com
`
`Page 3 of 7
`
`accelerating more than 7 mph in one second, boosts your insurance rate
`under Progressive's program. Even if you drive in a relatively calm
`manner, you may simply not like the feeling that every time you slam
`on the brakes or go for a midnight ice cream run, your car insurance
`rate is creeping upward.
`
`"People have different views on whether it's an invasion of privacy,"
`says Loretta Worters of the Insurance Information Institute (III). "But
`people are willing to do it for the rate reduction."
`
`The savings range will depend on your state. For example,
`Progressive's Alabama customers can see discounts of 40 to 0 percent,
`with no surcharge range, and have a "technology expense" of $5 a
`month.
`
`Computing car insurance premiums to take into account how much you
`drive, when you drive and how you drive gets complicated. According
`to the 2008 rating manual filed by Progressive with the Alabama
`department of insurance, MyRate customers can fall into one of over
`400 "usage-based insurance groups" depending on their driving habits.
`To be eligible for discounts, drivers must fall into one of the first 75
`groups.
`
`Recipe for savings
`
`>How to whittle down
`your car insurance cost:
`
`send the data without drivers
`being inconvenienced by
`sending it themselves.
`
`Privacy
`
`Second, drivers must be
`willing to be "observed" by
`their insurers via the data
`stream. Privacy remains a big
`question mark for consumer
`acceptance of pay-as-you-
`drive insurance. However, so
`far drivers have shown
`willingness to sacrifice
`privacy in exchange for
`saving money.
`
`State regulations
`
`Third, state regulators must
`approve the new programs
`and rates. "In some states it's
`an education process," says
`Hutchinson of Progressive.
`"It raises a lot of questions."
`
`Progressive customers can check their
`"Trip Details Log" driving profile online,
`sort trips by date and type of trip, and see
`their anticipated future discount. They can
`also drop out of the MyRate program any
`time and return to a standard policy if they don't like their expected new
`rate.
`
`Usage-based car
`insurance
`+
`Limited driving
`+
`A minivan (generally
`lower premiums)
`+
`The highest deductibles
`you can afford
`+
`All the discounts to
`While Progressive was first out of the gate in implementation of usage-
`which you're entitled
`based car insurance, there's a pack forming at the starting line. But some
`competitors may have an entirely different idea about how to run this race. Here's what some of the
`nation's other auto insurers are up to.
`
`"You have to pay some attention because you could end up in a higher
`position," explains Hutchinson. "People are reducing their mileage and this
`fits nicely. It's a good idea for some drivers out there. We're not trying to
`shove it at them." In addition, you can choose MyRate for one vehicle in
`your house but not the others. If you have a car that sits in the garage most
`of the time, MyRate would garner you large discounts.
`
`Progressive holds three patents related to its usage-based insurance system.
`
`Allstate
`
`spokesperson Raleigh Floyd says that in the company's various tests of usage-based insurance, "Our
`focus is the driver, and helping everyone improve their own awareness of their driving habits — good or
`bad. We’re looking at ways to make safer driving something everyone can achieve. Those safer drivers
`
`http://www.insure.com/car-insurance/usage-based.html
`
`2/21/2013
`
`

`

`Control car insurance costs: Pay as you drive | Insure.com
`
`Page 4 of 7
`
`should also be able to save on their insurance."
`
`
`
`
`
`Allstate is testing several devices and refining the feature and service combinations they feel will best
`deliver safer, more convenient driving.
`
`"We are also looking beyond the devices — to the way we shape our entire program:
`Everything from the way we share driving insight with customers to the experience
`they have while driving. We need to nail three things: engagement, enjoyment and
`peace of mind. If we keep the driver's experience at the center of everything we do, all
`— Raleigh
`the other pieces should fall into place," says Floyd.
`Floyd,
`spokesperson for
`Allstate
`
`"It feels like
`what's next."
`
`Allstate won't speculate on a launch date — or even divulge when testing began —
`but "it feels like what's next," says Floyd. "Customers are happy to tell us what works
`and what doesn't. They will certainly shape what we deliver in the marketplace."
`
`
`
`Erie Insurance
`
`is doing a test with 500 volunteers in Pennsylvania and Ohio. Erie is tracking speed, mileage, and
`acceleration and braking. Results do not affect premiums of the volunteers.
`
`
`
`
`
`The Hartford
`
`completed a six-month usage-based test in January 2008 using policyholder volunteers in Connecticut.
`GPS devices were used to track mileage and other data. The company has not released results from the
`test.
`
`
`
`
`
`MileMeter
`
`sells car insurance "by the mile" in Texas. Customers can purchase 1,000 to 6,000 miles and buy more
`miles as needed during a six-month policy period. MileMeter does not use tracking devices inside
`customer cars; instead, customers attest that the odometer readings they've given are accurate.
`
`
`
`
`
`State Farm
`
`is testing on a small scale in Oregon to determine the feasibility of usage-based insurance. Customers in
`the test have devices installed that track only mileage and are not paying usage-based rates.
`
`
`
`
`
`Benefits beyond insurance rates
`
`Drivers participating in pay-as-you-drive car insurance have hit upon other advantages to the programs.
`
`http://www.insure.com/car-insurance/usage-based.html
`
`2/21/2013
`
`

`

`Control car insurance costs: Pay as you drive | Insure.com
`
`Page 5 of 7
`
`Worters of III observes that parents use the "black boxes" to track teens' driving habits and speeding.
`
`If pay-as-you-drive car insurance takes hold and drivers everywhere trim mileage in
`order to save money, it will ultimately benefit everyone. According to a 2005 report
`titled "Pay-As-You-Drive Pricing and Regulatory Objectives," by Todd Litman of the
`Victoria Transport Policy Institute, "Reductions in total vehicle travel may provide
`proportionally larger reductions in total crash costs, since about 70 percent of crashes
`involve multiple vehicles, and the average crash results in about 1.5 claims. . . . If
`your current mileage does not change but all other vehicles reduced their mileage by
`10 percent, you could expect a 7 percent reduction in crash risk, since 70 percent of
`your crashes involve other vehicles. If you and all other vehicles reduce mileage by
`10 percent, you could expect a 17 percent reduction in total crashes."
`
`A June 2008 pay-as-you-drive report by Litman also states that the programs can
`result in pollution and emissions reductions: "If applied to all vehicles it will achieve
`approximately a third of the Kyoto emission reduction targets for private vehicles."
`
`It's an attractive proposition. "Some states have asked if we'd launch in their state,"
`says Hutchinson, particularly states concerned with miles traveled and greenhouse
`gases.
`
`"If your current
`mileage does not
`change but all
`other vehicles
`reduced their
`mileage by 10
`percent, you
`could expect a 7
`percent reduction
`in crash risk."
`
`— Todd Litman,
`Victoria
`Transport Policy
`Institute
`
`
`
`"More and more, acceptance is climbing," observes Hutchinson. "People view insurance as part of
`overall transportation costs and they're looking for relief."
`
` Related Articles
` 11 ways to save on car insurance
` More car insurance stories
`
`
`
`
`
`
`
`
`
`  
`
`
`
`
`
`
`
`
`
`More from Amy Danise here
`
`Ready to get a quote?
`
`Get quick and easy auto insurance quotes
`
`Zip Code:
`
`Zip Code
`
`Currently insured?:
` Yes
` No
`
`
`
`http://www.insure.com/car-insurance/usage-based.html
`
`2/21/2013
`
`

`

`Control car insurance costs: Pay as you drive | Insure.com
`
`Page 6 of 7
`
`
`
`Deal directly with top-rated companies
`
`
`
`See how much you could save
`
`
`
`
`Save big in Ohio with SelectQuote Auto & Home
`
`
`
`
`Switch and save up to 40% on auto insurance
`
`
`
`
`There are so many reasons to switch
`
`Related Articles
`
` The best and worst vehicles for preventing passenger injuries
` The best place to drive is . . . New York?!
` What your car knows about you
` The most and least expensive 2013 vehicles to insure
` Most and least expensive 2012 vehicles to insure
`
`Car Insurance Tools
`
` Best car insurance companies
` Car insurance comparison
` Car insurance company ratings
` Car insurance rates - by state
`
`More Insurance Tools
`
`See 2013 Customer Satisfaction Ratings
`
`Select insurance type:
`
`Auto
`
`http://www.insure.com/car-insurance/usage-based.html
`
`2/21/2013
`
`

`

`Control car insurance costs: Pay as you drive | Insure.com
`
`Page 7 of 7
`
`Ask The Car Insurance Expert
`
`Q:
`
`How do I leave a review about GMAC insurance?
`
`A:
`
`Thanks for asking, but our customer satisfaction survey is not available on our website...
`
`Q:
`
`My son is turning 18 in a couple of weeks. Should I put him on his own auto policy or leave him under
`mine?
`
`A:
`
`Our comparison studies have shown that it's usually cheaper to keep a teen on your own policy rather
`than put him on this own. But the only way to know for sure is to contact your agent and have him run
`the rates for putting your son on his own policy...
`
`More>>>
`
`
`
` About Us|
` Contact Us |
` Press Releases|
` Privacy Policy|
` Terms of Service|
` Site Map
`
`Copyright © 1984-2013 Quinstreet, Inc.
`
`
`
`
`
`http://www.insure.com/car-insurance/usage-based.html
`
`2/21/2013
`
`