Just as drivers are often looking for ways to lower their car insurance premiums, auto insurance companies are looking for new types of auto insurance that can help save their customers money and attract new applicants. One of these new types of auto insurance is pay-as-you-drive coverage.
For these insurance programs, drivers are not charged a blanket rate based on the usual factors that determine auto insurance premiums. While those things still play a major factor, drivers’ habits behind the wheel are also taken into consideration.
Therefore, a driver who only drives once or twice a week for short distances during safe times of day may be able to save significantly compared to their current rate.
Progressive’s SnapShot
The second iteration of Progressive’s pay-as-you-drive program is called Progressive SnapShot. In the program, drivers receive a device that they can mount in their vehicle, which monitors their driving habits, such as gentle braking, driving fewer miles and avoiding peak times of day
How the program differs from other pay-as-you drive programs is that drivers can begin saving just thirty days after their monitoring begins. After six months of monitoring, drivers will be able to finalize their SnapShot, and renew their policy with a new lower rate. In addition, the SnapShot auto insurance program can’t increase drivers’ rates, so premiums can only go down. The discounts, Progressive says, can be up to 30 percent.
The program is available for most vehicles, although some cars older than 1996 may not have the required diagnostic port for the device.
No Privacy Concerns
Progressive also says the program avoids any privacy concerns people may have about being tracked. The device doesn’t have any GPS or other location-tracking technology, and can’t detect if drivers are speeding.
The only information collected by the device is the time of day, the vehicle’s speed, when the device is connected or disconnected and the vehicle identification number.
Programs may impact driving habits
Other companies in auto insurance, such as State Farm and Allstate, have also created their own version of pay-as-you-drive policies.
The new types of auto insurance may be having an impact on their policyholders’ driving habits. Some drivers have said they now deliberately combine trips in order to cut down on their mileage, while others have said it may cause them to think more consciously about how they drive.