insurance

Cut costs with pay-as-you-drive coverage

3. Pay-as-you-drive insurance isn't offered everywhere. Each state has an insurance department that must approve this relatively new type of coverage, so the programs aren't offered everywhere. For the states that do have this coverage, only a few insurance companies offer it.

In 2007, GMAC Insurance rolled out its OnStar program in 34 states. Progressive's MyRate is available in only nine states: Alabama, Kentucky, Louisiana, Maryland, Michigan, Minnesota, Missouri, New Jersey and Oregon.

"More are coming," Hutchinson said.

The Hartford insurance company recently concluded a six-month, pay-as-you-drive study in Connecticut and is analyzing the results before making a decision on expansion, says Thomas Hambrick, spokesman for The Hartford. "We are excited about the possibilities that vehicle telematics technology can offer."

Unigard is testing a pilot program, but only in the state of Washington. "It's still in process," spokesperson Anne M. Smith says.

In California, a bill before the legislature may open the door for drivers there to participate in voluntary mileage-based insurance. The intent is to reduce greenhouse emissions in the state by offering vehicle owners an incentive to drive less.

It's a laudable goal, says Holober, the California-based consumer advocate, but he says he still has concerns. For example, drivers of older cars wouldn't be able to receive the lower rates, since their vehicles couldn't use the required technology. "Everyone should have access to the discounts," Holober says.

4. A variety of driving data can be collected. If insurance companies are only concerned with accurately obtaining the number of miles driven on the car, there are ways to do it without the need to install tracking equipment, Holober says.

For example, many states, such as California and New York, already require an emissions test on many cars on a regular basis. "Odometer readings could be collected (during these tests) and sent to insurance companies," he says.

However, high-tech data-collection devices could gather much more information. They can detect how fast you accelerate, how fast you brake and the time of day you drive, Holober says. These factors could be considered in your insurance rating, since they tend to reflect whether you're a safe driver.

Progressive's Hutchinson says that the first privacy question he usually receives from drivers is if Progressive is tracking their location, and the next question is whether the company is measuring their speed. The answer to both questions is no, he says.

"We don't track you with a GPS monitoring system, and we don't monitor your speeding habits," he says.

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Customers also want to know what happens to the data that's collected.

"We have a privacy statement that's part of our terms and conditions. Consumers can access it on our Web site," Hutchinson says. According to the site, Progressive will not sell personally identifiable MyRate data to third parties. The company also won't use MyRate data to resolve an insurance claim unless it receives permission to do so from the driver or vehicle owner.

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