Car insurance tracking devices have been a relatively large flop for the insurance companies. That is not too surprising given America's strong desire for privacy. Most consumers do not like the insurance companies knowing their location and speed of travel amongst other things. In an attempt to combat this fear, some insurance companies have taken certain steps to ensure the consumer's privacy. But there is still not enough consumer knowledge for them to justify these programs. Are they actually good deals for the client? Or, are they a genius way for the insurance companies to increase profits?
What are Insurance Tracking Devices
About five years ago, Progressive began advertising their product "Snapshot," a device that plugs into your vehicle and will give good drivers a discount on their rates. Vehicles that have been manufactured after 1996, are built with a diagnostic port in them (usually under the dash). This diagnostic port allowed mechanics to plug their computers into the port to diagnose the vehicle's engine, performance, and determine any irregularities in the vehicle.
It was not long until someone designed a device that can be plugged into the same diagnostics port, that will transfer all the computer information to an app, or a program. The insurance companies saw an opportunity here. Use the devices to offer discounts to safe drivers who are less likely to be involved in an accident. This will help reduce the insurance companies overall expenses, and help safe drivers save money.
There were just two major issues with this program:
- During the early stages of sales, some insurance companies would increase rates for poor drivers. This deterred most people, including relatively safe drivers, from signing up for fear that their rates would increase.
- More importantly, people do not want the insurance company monitoring their driving habits. Speed and location appear to be most people's objections.
How do the Insurance Tracking Devices Work?
Every insurance company has their own tracking device. Progressive has "Snapshot," State Farm has "In-Drive," Safeco has "Right Track". Each company uses these devices differently. Most of the companies no longer increase your premiums. They have learned that increasing clients' rates is not a good way to encourage consumers to sign up for programs. However, the stigma is still there.
Some companies require that the device be plugged into the vehicle for the duration of the program. This means that many clients are constantly having their vehicles monitored year round. However, other companies only require you to drive with the device in your vehicle for a few months. This gives them an idea of what kind of driver you are and they base their discounts on this short time frame. After a few months, you simply mail the device back in and keep the discount.
My Personal Experience with the device
I do not believe in selling something that I have not tried. So – much to my wife's dismay – about a month ago, I signed up for the program with my insurance company. It has been fun monitoring my driving more than anything else. The insurance company I use for my home and auto policies requires that you keep the device plugged into your vehicle for 90 days. During that 90 days, they give you a 10% discount on your premiums. They monitor your driving and base a discount between 2% and 25% off, determined by your driving habits. To me that is a win-win scenario, because it will not increase my rates.
Having completed the program myself, my biggest suggestion to clients who sign up is this: remember the device is in your car, so drive safe. But, do not constantly monitor your alerts or driving habits, because iIt will drive you insane. There were times that I was given an "alert" when I was pulling into a parking space. Other times, I would slam on my breaks on the highway, or hit my accelerator in anger. I thought for sure I would get an alert. But none ever came. The monitoring process does not make a lot of sense, but I still received a decent discount. Right now my family has an additional 15% off one vehicle and 14% off another that we would not have without trying this device out.
What are the benefits of signing up?
There are three main benefits of the program:
- Saving money on rates and getting a discount on your auto insurance is the largest. The discounts range depending on your driving habits but many people average between a 5% and 20% discount per vehicle.
- The insurance company is not the only one who can monitor your vehicle. You can monitor it too! This opens the door to many different options. These devices will tell you when something inside your engine is about to wear out or go bad. It will tell you when you are low on oil or liquids and when they need to be updated. This allows you to get actually your vehicle into the shop for repairs before the car breaks down and you are stuck with a higher mechanical bill and towing costs.
- The program works very well for parents of teen drivers. All vehicles have GPS devices in them, and the tracking device that is plugged into your vehicle will also monitor the GPS. So when you need to know where your teen driver is, you can pull up a map which shows where they have been and where they currently are. Many of these devices will also notify you if the vehicle goes over a certain speed. It is a great way to monitor your teen driver as they learn the road.
Which insurance company would I recommend?
Of all the insurance companies that have these devices, my favorite is probably Safeco. There are four key features that I like about Safeco's program specifically.
- Safeco uses a third-party company in order to help limit what is monitored. Their RightTrack device only tracks when you hit your breaks hard, hit the accelerator fast, and when you drive between 2 am and 4 am. They do not track the GPS or when you go over a certain speed (which some companies do). By using a third party company, they are able to limit the information that they receive. The third party company will only send Safeco information when these three activities occur. Safeco is not notified of anything else, especially speed or GPS location.
- Safeco only monitors your driving for 3 months. After that time, you can remove the device from your car and you get your discount. You are automatically given 10% off during your three-month trial, and after the three months are over, you are set up on a discount based on your driving habits. That may be 5% or 25%, but you still save some money. You have the option to retain your device for an annual fee, but the insurance company does not monitor it at that time. Parents of teen drivers often decide to retain their devices. Or you may send your device back and not have an annual fee just have a discount.
- Safeco does not increase your premiums. The only time you will see your rates increase would be at the end of the three-month monitoring time period if you have less than a 10% discount. At that time the 10% discount would fall off and the new discount would apply. The average discount in the nation is 16% so most people do not run into that issue.
- Safeco's discount is retained for the life of the policy. As long as you keep that policy in place, you will retain your discount and it will not be removed. This is a much better option than having a company who monitors year round and may change your discounts each year.
There is a lot of information consumers do not know about the insurance tracking devices. Are they worth the effort? It depends on the company you are signing up with, what program they offer, and your specific needs. But there are some companies that do offer really good deals with the program if you are willing put in a little effort for the discount.