Understanding the Use of GPS Tracking in Auto Insurance: A Comprehensive Guide
With advancements in technology, several auto insurance companies such as Allstate and Progressive have started implementing GPS tracking devices in their insurance offerings. These devices, like Allstate's Drivewise and Progressive's SnapShot, aim to monitor and analyze driving behaviors to personalize premiums for policyholders. This article will explore the functionalities, benefits, and concerns of using GPS tracking in auto insurance, as well as the evolving trends in this industry.
How GPS Tracking Works in Auto Insurance
Auto insurers like Allstate and Progressive use GPS tracking devices that plug into the On-Board Diagnostic (OBD-II) port of a vehicle to collect data. This technology enables them to monitor specific driving behaviors and factors that may affect insurance rates.
Monitoring Key Driving Behaviors
Hard Braking: Accelerating frequently and hard braking are seen as indicators of dangerous driving habits. Driving Times: Insurers prefer that drivers avoid driving during late night and early morning hours, as accidents are more common during these periods. Speed: Exceeding the speed limit, especially above 80 mph, is recorded as unsafe driving behavior.Benefits and Incentives
By monitoring these behaviors, insurance companies can offer lower rates to drivers who demonstrate safe driving habits. For instance, Allstate's Drivewise program offers a 3% discount, while Progressive's SnapShot offers a 5% discount for those who participate actively. The devices need to be installed for at least six months, and in some cases, like Allstate, it may require a longer period.
Device Options
Progressive offers an additional option for those who do not want to install a dedicated device. They can use their mobile phone to track driving patterns, although the full details of this option are not fully disclosed.
Other Companies and Programs
Another example is Safeco Insurance's Rewind program, which uses a small device similar to a flash drive that can be installed in the vehicle's on-board computer system. This program allows drivers to remove the impact of one accident or violation from their rating criteria for a period of six to twelve months, provided they qualify. The insurer will then continue to monitor the driver's performance. After four months, Safeco will decide if the accident or violation should continue to be factored into the rating.
During a recent meeting with my Progressive marketing representative, she mentioned that Progressive's program focuses on mileage and time-of-day usage. No other carriers in my office have indicated that they are planning to use similar devices to determine rates or discounts, but the industry is continually evolving, looking for new and innovative ways to enhance services and customer satisfaction.
Conclusion
The use of GPS tracking in auto insurance presents both opportunities and challenges. While these technologies can lead to more personalized and potentially lower premiums, they also raise privacy concerns. Nonetheless, the trend is growing, and as technology continues to advance, we can expect more insurance companies to adopt such solutions.
This comprehensive guide is to help policyholders understand these programs and make informed decisions about whether to participate. It is always a good idea to review the specific terms and conditions of any program before enrolling.
Frequently Asked Questions (FAQs)
Q: What data does the GPS tracking device collect?A: The devices primarily collect data on speed, hard braking, and driving times. No GPS location data is stored. Q: How long do I need to keep the device installed?
A: For most programs, the device needs to be installed for at least six months. Some companies may require a longer period. Q: Can I use a phone instead of a dedicated device?
A: Yes, some companies like Progressive offer a mobile phone option, but the details of this option vary.