Cars Blog

Finance Blogs » Cars Blog » Use-based car insurance growing

Use-based car insurance growing

By Tara Baukus Mello ·
Saturday, September 7, 2013
Posted: 6 am ET

The interest in use-based car insurance -- where consumers pay insurance rates based on their driving habits -- is growing, with 36 percent of consumers saying they would change carriers for a 10 percent discount on their car insurance rates, according to the 2013 Telematic Survey by Lynx Research Consulting for LexisNexis.

Usage-based auto insurance uses a telematics program to determine the time, frequency and manner in which the car is driven, collecting the information and providing it to the insurance company to determine if a driver is eligible for discounts on insurance premiums. One-third of respondents said the idea was appealing and are likely to allow a personal smartphone to be used to collect and transmit the necessary data.

The study found that 61 percent of drivers are more likely to accept telematics if insurers offer a three-month trial period, while 72 percent are more likely to accept a program if the car insurance provider offers an automatic 10 percent discount during the first six months.

How about you? Would you accept telematics?

Tara Baukus Mello writes the cars blog as well as the weekly Driving for Dollars column, providing both practical financial advice for consumers as well as insight into the latest developments in the automotive world. Follow her on Facebook here or on Twitter @SheDrives.

Bankrate wants to hear from you and encourages comments. We ask that you stay on topic, respect other people's opinions, and avoid profanity, offensive statements, and illegal content. Please keep in mind that we reserve the right to (but are not obligated to) edit or delete your comments. Please avoid posting private or confidential information, and also keep in mind that anything you post may be disclosed, published, transmitted or reused.

By submitting a post, you agree to be bound by Bankrate's terms of use. Please refer to Bankrate's privacy policy for more information regarding Bankrate's privacy practices.
September 11, 2013 at 12:21 pm

No way!

My insurance company tried to sign me up for this. It involved plugging a device into our vehicles that monitors your driving habits. They can monitor how many miles you drive, how hard you brake, how fast you are going when you turn, etc. Most importantly, if you are in an accident, the device collects information about the accident in order to help the insurance company deny your claim. All of this for an amazing savings of......drum roll....... $50 a year! This is pretty much a no-brainer. Don't fall for it.

September 11, 2013 at 11:41 am

@ als

Excellent post! I couldn't have said it better myself.

September 11, 2013 at 11:13 am

Absolutely NOT!!!

Amazing how much privacy people will give up for a little cash. Any fool that tries this is setting the stage for it to become the accepted norm...and once that happens, the rates will just go up again. It a scam to try and get motorists to accept being spied on. Then the next step is the data is shared with the police with obvious results...Think about it people. 10% discount? you couldn't get me to sign on for a 50% discount.

Tell you what.. How about my insurance company refund me all those years I paid without needing them to shell out.... Fat chance that will happen.

Joey B
September 11, 2013 at 10:47 am

Insurance is a money game. The insurer takes a risk that you will not be involved in a car accident. Actuaries determine your risk based on your driving history and personal information you provide (age, gender etc.). But if you let them track your driving, its like a poker game where they see all the cards and then make the bet. ITS CHEATING!!!

September 11, 2013 at 10:22 am

Spot on, Bob.
Insurance is the problem, not the solution. Not only do you have to pay premiums, but deductibles and limits, plus they try every way possible to deny claims.

September 11, 2013 at 2:32 am

Let's just go all the way and be communists.

September 11, 2013 at 12:51 am

No Way! I am sick of being spied on. Progressive already has something like this and all it does is spies on you. If you're speeding when you have an accident, the program tells them that and they will NOT cover the accident, saying that your speeding caused it.

September 10, 2013 at 11:00 am

This is even worse than letting the government snoop into our private activities. Grotesque totalitarianism, conducted by business entities that aren't subject to Constitutional constraints.
Besides, if insurance companies' actuarial considerations target every person according to risk, what's the point of insurance companies at all, unless they're small-scale, mutual insurance companies? If everybody is dunned according to every risk, then our premiums are not going to be any better than self-insuring. Why not leave out the middleman, and keep the profits he's taking, and put them into a self-insurance pool? America has gone nuts over insurance in the past several decades, with little attention paid to how insurance makes whatever goods and services it covers more expensive. And then there are the administrative costs. And profits. It's like a safety-addiction-- it creates its own demand, as it makes everything so expensive that one can't afford to be without insurance. It's like heroin.

bill c
September 10, 2013 at 12:38 am

I let Progressive do it. I kept getting updates that I was getting the whole 30% off due to how little I drove my truck. I have had it four years and have put 13,000 miles on it.

Then one day I take it out for a round trip of about 80 miles in one day. I get a notice that they are hiking my rate 7%. For one 80 mile trip? It is a joke.

September 07, 2013 at 5:23 pm

No, I would not want "big brother" insurance company watching what I'm doing. No thanks.