Here’s another example of how the tortoise beats the hare. The insurance industry is starting to offer lower rates for drivers who drive less, apply a light foot on the pedal, and avoid sudden stops. These driving habits save fuel and reduce carbon emissions. They also cut down on accident risks and the resulting insurance claims. Now technology is helping insurance companies identify such conservation-minded drivers and reward them with lower premiums.
To get the benefits, drivers have to agree to put a device in their car (it plugs into the same diagnostic port as the ScanGauge) that tracks driving patterns. Every six months, participants must upload the collected data and send it to the insurer. A more advanced system can transmit the information wirelessly. There’s no GPS tracking involved, which the insurance companies say should allay privacy concerns (although some drivers may not be convinced).
Two big insurers offering the pay-as-you-drive discounts in selected states are Progressive (via the MyRate program) and GMAC Insurance (via the Low-Mileage Discount program in association with OnStar). Researchers at The Hamilton Project of the Brookings Institution report that broad adoption of such programs could reduce driving by 8% nationwide, with comparable CO2 reductions. Average savings for participants could be $270 per car per year.
Pay-as-you-drive insurance would probably be more common were it not for restrictive state regulations. Each state has its own insurance rules, which often limit innovative pricing programs. A bill pending in California would open up this feature to drivers in the state with the most cars. You can support the legislation here.