I'm A Good Driver And I Can Prove It!

Many people have been telling me for years that they are a great driver! Well being that I can't ride with them everywhere they go, nor do I want to. Some of you all make me a little nervous behind the wheel! No joke everyone knows that one person that is kinda crazy! Back to the good drivers. Many of you say you are good drivers and now you can prove it! For years Progressive has what they call a Snapshot. Many other insurance companies have followed suit. This is all peaches and cream, but what does it mean and how does it save me money?

Snapshot and all the other devices are monitoring driver behavior through what they call telematics. Telematics is a usage-based insurance; it is the development of premium rates in part by monitoring the vehicle and the number of characteristics. The characteristics are:

• Mileage
• Speed
• Lane Shifting 
• Hard Braking 
• Turning
• Cornering
• Fast Acceleration
• Time of Day
• Territory
• Type of Road

A monitoring device is put into the car that measures and records the desired variables. The monitored variables are the combined with traditional rating factors such as claim history, driving record, vehicle make, model and demographics. Rates are set based on the combination of variables. Recording can be for a limited time or continuous. Limited recording is when the vehicle is monitored for six months, then the device is returned to the insurance carrier. Continuous monitoring is when the device stays with the vehicle and monitors continuously. Privacy issues are a major concern; some feel as though "BIG BROTHER" is watching and object to being monitored every time they drive.

Some equipment uses GPS to monitor location; this raises even more privacy issues, although it does provide better information for rating. With GPS the insured's locations are tracked. GPS can identify the types of roads the driver is on, posted speed limit, types of turns and other significant information. 

Whether the vehicle spent 10 minutes going 30 miles on the highway or 30 minutes going 10 miles in heavy traffic is identified. Territory can tell a lot, but only if GPS is monitored. 

Advantages to telematics are that it is fair and predictive, and you understand how it relates to rates. It is intuitive, while insurance credit scoring is not for many. It allows you to improve your driving for your own benefit; your rates are more tied to you specifically instead of a large demographic of similar individuals. Disadvantages include privacy issues, hacking concerns, cost to the insurance company of providing the device if it is provided for free, and storage of the data collected.

I hope that this answers many of your questions. Please feel free to Comment.