Drive Less, Save More: Discount Offered to Infrequent Drivers
Progressive Corp. and GMAC Insurance have teamed to offer discounted rates to customers who drive fewer miles, according to a report in The Wall Street Journal. Under the program, the fewer miles drivers log, the more dollars they save -- a reflection of the reduced chance of an accident occurring (and thus, the less risk involved) for those drivers whose cars spend much of the time sitting idle in a garage because their owners primarily commute via public transportation. The fine print: the discounted plans are not available to all drivers.
GMAC's plan, currently being offered in 34 states, is available to those who own a GM car that comes equipped with the OnStar navigation system. The plan verifies mileage by automatically reporting the car's odometer reading at the beginning and end of an insured’s policy term. Those who drive less than 2,500 miles a term are granted a savings of up to 54 percent on their auto insurance, according to the report.
Drivers don't have to own a GM car to participate in Progressive's TripSense plan, but they must live in Minnesota, Michigan or Oregon, and be willing to install a small device in their vehicle that automatically tracks mileage. In contrast to GMAC's program, Progressive customers must download and report their own miles to receive discounts. TripSense also tracks other driving habits to assess risk, enabling policyholders to reduce their insurance rates by 5 percent to 25 percent.
Consumer advocate groups say they are receptive to the plan, presuming that drivers don't mind their insurers collecting information about their driving behavior.
Published on August 6, 2007
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