Car insurance based on driving habits comes to Utah | The Salt ...

(Steve Griffin | The Salt Lake Tribune) Allstate Insurance agent Adam Ware holds a prototype DriveWise device that he has been using in his personal car for the past few months. Allstate plans to roll out their DriveWise program which uses the device to measure customers' driving habits and charge them premiums based on the results. He was photographed outside his Sandy, Utah office Tuesday February 12, 2013.

Coverage ? Next big thing in the industry could raise privacy issues for some.

From iPod players to chargers to video screens, today?s cars are full of gadgets.

So how about adding a device that monitors how you drive? And how much privacy would you give up for a discount on your auto insurance?

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Usage-based auto insurance available in Utah

State Farm ? Drive Safe and Save

Allstate ? DriveWise (coming in 2013)

Progressive ? Snapshot

Thanks to advancing technology, a new car insurance product is entering the Utah market known as usage-based insurance.

Here?s how it works ? You plug in a little gizmo just under the steering wheel of your car (or use On-Star) and it starts tracking your driving habits, such as speed and mileage. Then, all of that information goes to the insurance company which, based on a month or so of data, spits out your insurance premiums. It?s all optional, but insurance companies say there may be double-digit discounts for those who participate.

"I?m going to love it; my wife?s not," said Adam Ware, an Allstate agent in Sandy.

Ware installed Allstate?s DriveWise device in his two cars in December and it?s been tracking the couple?s driving habits ever since.

"It?s showing that I?m eligible for a 17 percent discount and she?s showing a 2 percent discount" for slamming on the brakes a bit too often, he said.

For Ware, it?s all about the money.

"In today?s world, if it?s going to give me a discount or an advantage, I?m all for it," Ware said.

The usage-based trend ? Consulting firm Towers Watson calls usage-based insurance an "auto insurance revolution." But the pay-as-you-use model is nothing new in consumer products, with the cell phone market leading the way. Himanshu Mishna, a University of Utah professor who studies consumer behavior, said user-based pricing benefits both businesses and consumers.

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"Having a pay-as-you-go option makes it easier for companies to segregate light users from heavy users and then charge heavy users more," Mishna said. "In addition, it gives people the freedom to use the service as much or as little as they want, which might be appreciated by consumers who won?t feel that they have been forced into a specific usage level."

But are consumers willing to swap a bit of privacy to save a buck? Mishna says yes.

"When we use a loyalty or discount card at any grocery store, we are giving up our purchase history for a 1 or 2 percent discount," he said. "If you buy diapers, they will mail you coupons for baby foods and baby soaps. So if you look around, we are already selling our privacy for small discounts."

How it?s working in Utah ? So far, only a handful of Utah?s top auto insurers are offering usage-based premium programs, and the data tracked varies from company to company. For instance, the state?s largest auto insurer, State Farm, uses On-Star to record miles driven, acceleration, braking, right and left turns, speeding over 80 mph and the time of day the vehicle was driven.

State Farm corporate spokeswoman Angela Thorpe said their Drive Safe and Save (DSS) program has been available to Utah customers since last March and their customers can save up to 50 percent.

"It?s a program that helps us better match price to risk, and that?s a good thing for our customers," said Thorpe. "This discount program tends to inspire State Farm customers to drive fewer miles, which has a positive impact on auto safety, roadway congestion, the cost of vehicle operations and the environment."

Allstate won?t introduce its DriveWise program into the Utah market until mid-year. But in the 10 states where DriveWise is now available, Allstate spokeswoman Chelci Vaughan said the average customer is getting 14 percent off their insurance premiums.

"It?s certainly been a popular option," Vaughan said. "If you?re willing to drive with [the device], why would you not sign up for a discount? People are eager to jump at the chance for savings."

A million drivers nationally have signed up for Progressive?s Snapshot program and about two-thirds are getting a discount, said Dave Pratt, Progressive?s general manager for usage-based insurance. Pratt said since Snapshot rolled out in 2010, they?ve collected 6 billion miles worth of information, but he assured that the data is secure.

"We only use the data to calculate the discounts. We don?t sell it," he said, noting the company has a special privacy policy in place. He also said early versions of Snapshot tracked where drivers were going, but objections from customers pushed the company to remove GPS from the program.

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Source: http://www.sltrib.com/sltrib/money/55824151-79/insurance-allstate-based-discount.html.csp

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