Insurance for a Second Car You Rarely Drive

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Having a second car is often a matter of practical necessity. For instance, if your primary home is in one state, but you maintain a family or vacation home in another, you may keep a car in storage at the second location for the sake of convenience. That’s just one potential scenario, but in any case where you have a car that is driven a limited number of miles a year, you want to keep your insurance premiums on that vehicle as low as possible. If this is the case, the pay-as-you-drive insurance model, which is rapidly gaining in popularity could be an excellent coverage choice.

The Progressive “Snapshot” program offers discounts of as much as 30 percent to qualified drivers in more than 20 states including Alabama, California, Colorado, Florida, Kentucky, Louisiana, Maryland, Michigan, Minnesota, New Jersey, Oregon, and Texas. The policy holder agrees to plug a small telematic device into their vehicle’s OnBoard Diagnostic port, a standard feature in all cars made after 1996. The device collects speed, time of day, and mileage, but is not GPS enabled. After the initial 30-day period, eligibility is determined and a discount figure offered. The program is completely voluntary and customers can opt out at any time.


Allstate has a variant on this real-time discount model called “Drive Wise” that is currently available in Illinois only, but is expected to expand to other parts of the United States by the second quarter of 2011. Like Progressive, the company uses an onboard telematic device for data collection. Current estimates suggest discounts of as much as 30 percent, on par with the Progressive coverage.

State Farm will work with drivers who have the OnStar system on their cars to base rates on monthly driving reports that are entirely based on miles driven. The company says that in some cases resulting price breaks can amount to 45 percent. Because the program is completely mileage based, it’s easier for customers to quantify and access their own mileage data and to understand how that translates to a premium discount. Progressive and Allstate look at other factors that contribute to safe driving for rate determination.

In none of these programs are drivers penalized for bad driving habits or even for miles driven per se. They simply don’t receive a discounted rate. Early studies have shown that drivers enrolled in such monitoring programs naturally adopt safer driving habits because they know they are being observed. Safety advocates point to this fact as an added plus to the stated goal of seeking lower premium rates.

In states where PAYD coverage is not available, owners of a second, lightly used vehicle are best advised to mine all the traditional discount sources — multiple policies with one insurer, paying by the quarter or yearly to avoid processing and statement fees, dropping rental coverage, and potentially nixing collision as well if the car is older and likely to be “totaled” by the insurer in the event of an accident. When shopping for any auto insurance, comparing multiple quotes is the keystone of a successful bargain hunt. Online quote engines make this especially simple to do and are an excellent source for less expensive auto coverage.