Everyone has personal habits. Exercising regularly is a good habit, because it enhances your health. Smoking, on the other hand, is a bad habit because it’s detrimental to health and can lead to a variety of medial ills. The life insurance and health insurance industries have used personal habits for policy underwriting purposes for many years. It’s a simple fact that smokers pay more for life insurance, and personal attributes such as obesity may play a role in policy rates in some instances.
But what about auto insurance? In the past, it’s been difficult for auto insurers to assess the personal driving habits of the drivers that they insure. With advents in technology, however, habits based discounts are starting to appear in the auto insurance industry.
Embracing the Technology
Progressive was the first auto insurer in the U.S. to roll out habits based discounts to its policy holders. Branded as “Snapshot”, Progressive policy holders who enroll in the pilot program are given a small transmitter that is connected to the car’s onboard computer. The transmitter monitors driving habits such as speed, distance traveled, time of day driven, and braking. This information is then transmitted back to Progressive, and drivers are rated after a 30 day period. Policy holders can expect anywhere from a 10 to 30 percent discount, based on an assessment of their driving style.
Insurance companies are quick to point out that habits based discounts are not intended to penalize those policy holders who exhibit less than ideal driving styles. Progressive says that data from anyone participating in the Snapshot program will not be used to increase an individual driver’s rates – the worst case is that a driver gets no discount on their policy. Allstate and State Farm are both rolling out similar habits based discounts, and other major insurers will almost certainly follow suit.
Privacy advocates worry, though, about the overall monitoring capabilities of the transmitter technology that enables habits based discounts. While insurance companies do not currently use GPS-type capabilities to track where an insured car is being driven, the potential certainly exists. And while these types of programs are currently voluntary, concern exists that over time, state insurance commissions could eventually approve habits based discounts technology as mandatory for all insured drivers.
At present, though, habits based discounts give a policy holder the option of potentially making a significant dent in their auto insurance rates. If you’re searching for ways to lower your auto insurance rates and don’t mind having your driving style monitored, talk to your agent to see if your insurance company offers a habits based discounts program.