A Princeton Survey Research Associates International survey of 1,000 adults found surprising results – 51% of those asked said they would not consider a pay as you go auto insurance program. Many concerns, from privacy to not understanding the programs, cause consumers pause when considering making the jump.
Pay As You Go auto insurance uses a device that plugs into the “OBD-II” port of your car to record driving habits and GPS coordinates. All modern cars have ODB-II ports, which are normally used to feed performance information from the cars computer for mechanics to analyze. The insurance company device looks at what time of the day you drive, where you go, how fast you are going and how hard you break. Some companies require you to only keep the device attached for 30 days while others demand it stays with the car for as long as you are insured.
There are very few companies offering this device currently, with Progressive being the most public advertiser. All carriers insist that the intent of the devices is to reward good drivers and not punish bad ones. However, consumers are rightfully nervous. It should be noted that any rating program, including drive as you go and other monitoring programs, needs to be approved by state regulators and created using sound actuarial methods. Although Illinois has allowed these plans into the states not all have.
For many families auto insurance is one of their greatest expenses and any option that can reduce this expense should be considered. The monitoring devices are especially advantageous for drivers who have had moving violations or accidents. Insurance companies rely on statistics to calculate rates – they need hard evidence of a bad drivers improved habits. Most insurers look at five years of driving records, which is an awfully long time. Using a recording device allows a driver with an incident or two to show they are driving safer immediately.
The verdict is still out on whether these devices are here to stay, if consumers continue to push back it’s likely insurers will stop making investments in the technology and no new carriers will roll out the option. If the technology proves to be beneficial, there’s a chance some insurers will decline to offer coverage without a monitoring device installed. Some future predictors say this is a all a moot point as down the road we will all be sitting in crash-proof self driving cars.
Working with an expert and independent auto insurance agent like Castlewood Insurance Services will allow your family to make an educated decision as to what’s in your best interest. The traditionally sleepy insurance industry is starting to wake up, with customer friendly WalMart and tech savvy Google making potential waves in the space. The insurance carriers, pricing and terms remain local and fragmented – trusting a local agent continues to be the best way to get honest and up to date information on ways to save on premium costs.