Do car insurance tracking devices save you money? Here at Affordable Insurance in Aurora, we are often asked about the pros and cons of these tracking devices. Several insurance companies advertise getting one with the promise of great discounts. Today, we provide some inside information on these devices so you know exactly what’s involved and can make up your own mind on whether or not to use one.
What Exactly Is a Tracking Device?
Car insurance tracking devices are small pieces of hardware, about the size of a matchbox that can be plugged directly into your car’s computer. Built-in computers control the majority of cars produced in the last 25 years. With a tracking device plugged into the OBD II port, all types of vehicle data generated by this computer can be extracted, stored, and sent wirelessly to your insurance company. The car insurance company can then analyze this data and offer discounts to safe and careful drivers.
How Long Have Tracking Devices Been in Use?
Telematics tracking for the auto insurance market was pioneered in the United States by Progressive in 1998. They designed a standard opt-in program for motorists who wanted a reward for their good driving. Since then, telematics tracking has grown in popularity with European drivers now leading the board of most likely to sign up for monitoring by their insurance company.
What Information Can My Insurance Company Collect?
The data that auto insurers are most interested in gathering via the device in includes:
- Time of day driving takes place
- Distance driven
- Time spent driving
- Hard braking
This information can be collected over time and used to build up a profile of the driver. Certain habits such as driving irregular distances, driving late at night, breaking the speed limit and frequent hard braking (slamming on the brakes) can paint a picture of a risky driver.
Another critical piece of information transmitted by car insurance tracking devices is the car’s location. While some may think this unnecessary, insurance companies defend the GPS tracking component as being beneficial. In the event of your car being stolen, they can easily track the location and share this information with the police. This often leads to a recovered vehicle instead of an insurance claim – your carrier doesn’t have to cut a huge check to replace the vehicle (if you even have the right coverage), nor do you have to cover the deductible or worry about rate increases after such a hefty claim.
The data collected by car insurance tracking devices can also be used to help analyze fault in an accident or collision. Having access to a replay of the exact location, speed, and sequence of braking, turning and acceleration can be a far more reliable source of evidence than the other driver involved or an impartial eye-witness. This will help both you and your car insurance carrier fight false claims made against you.
How Much Money Can I Save Using a Tracking Device?
Companies market their car insurance tracking devices as a way for ordinary drivers to save money on insurance costs. Usually, in return for good driving, the company will reduce the overall yearly premium cost or give credits on the driver’s account. Typically, at least six months of uninterrupted use of the device is needed to collect enough data and earn a discount.
Forbes has reported that around two-thirds of drivers that participate in the program receive a discount, averaging out at $150 per year. A discount is not guaranteed, even if you feel that you have driven well over at least six months. Each car insurance company has its own algorithm in place to calculate risk factors based on your driving. What may be considered safe driving by one provider may not make the cut with another. Unfortunately, insurance companies do not release their formulas, so it is fairly impossible for a driver to hack their system.
Why Are Some Drivers Resistant to Using a Tracking Device?
Many drivers are averse to the idea of letting their insurance company become a Big Brother, surveying their every move. There are arguments that the GPS location tracker is unnecessary and crosses the line of privacy. However, there are millions of devices out there, making the chances that you are being watched by Flo at Progressive slim to none. Besides, if you’re out and about and want to find a good restaurant nearby, using an app like Yelp requires you to share your location with their servers. It’s not an invasion of privacy and neither are telematics devices – IF you decide to opt into the program.
So far, programs offered by insurance companies have always been based on rewards for good driving, rather than penalties for bad driving. This could change. The insurance industry could move towards UBI, or User Based Insurance, which would personalize the cost of insurance for each driver based on their performance. This means that drivers with good habits will get lower rates, and more risky drivers will be punished with extra charges. Many drivers view this in a positive light, however, as it means they will only be paying for their own risk, and not the collective risk of everybody insured by the company.
Is It Worth It?
While a discount is not a guaranteed result of using car insurance tracking devices, currently there are no penalties associated with having it installed. Right now it is a win-win system, so you may as well give your insurer the option to reward you. Remember, it is an opt-in program, and nobody will force you to continue if you don’t want to. You can opt-out at any time. However, once the device has been turned off or disabled, you will lose any discount earned.
So, do car insurance tracking devices save you money? The answer is… probably if your driving habits fit into the good driver template devised by your insurer. At the very least, you won’t lose any money. The benefits of having a tracking device may outweigh the disadvantages, especially when you take into account being able to track your car if it is stolen or involved in a collision. For more information or assistance in putting together an insurance package that fits your needs, don’t hesitate to contact the friendly team at Affordable Insurance in Aurora, Colorado.