Auto insurance companies offer savings by tracking device - Fox29 WFLX TV, West Palm Beach, FL-news & weather

Auto insurance companies offer savings by tracking device

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(RNN/NPN) - More and more companies are offering an option that will help save on auto insurance, but it's going to cost your privacy.

Matthew Mangiapane considers himself a pretty good driver, though certainly not perfect. "I've only really been in one accident. That was some time ago. And I've gotten one speeding ticket," said Mangiapane.

When he heard about a device he could install in his car, allowing the insurance company he uses to track his driving and potentially save on his premiums, he was all for it. "They sent me the device. I plugged it into my car and based on my driving I was able to reduce my insurance by 29 percent," Magiapane said.

It's referred to as usage-based insurance, a voluntary program accelerating in popularity among insurance companies, with more than 18 currently offering this option, including Progressive, State Farm, and Nationwide. It wirelessly transmits data about how you are driving and sends it real-time to insurance companies.

"If you're a safe driver, if you're not stomping on the gas pedal and slamming on the brakes and swerving in traffic and exceeding the speed limit, you're going to get a better insurance rate than people that are unsafe drivers," said Bob Rusbuldt.

And what if the feedback shows the customer isn't a great driver? "What the insurance companies are saying today is you will not get a higher premium by entering this program and your driving habit showing that you don't qualify for the premium discount. You'd be in the regular underwriting pool. Now, will that change in the future? I think the jury is out," Rusbuldt said.

Experts argue this is a much better way of setting rates than the current options. "Right now, insurance companies use a whole host of other factors in determining the price of your premium: your age, your gender, your marital status, and your credit reports. This actually only takes into account one thing: that is your driving habits," Rusbuldt said.

Experts say before giving car insurance companies the green light on tracking, ask questions about privacy rights. "First, do they use GPS? Second, does any third party have access to the data like advertisers or marketers? And then third, can those records be subpoenaed? The answer is almost always yes," said Pam Dixon, World Privacy Forum.

Some companies may allow customers to opt out of the location tracking portion. The key is to understand the terms and conditions before you decide which way to turn. "Every person has to do the risk/benefit calculus. Is it more privacy risk for me or is it more pricing benefit?" Dixon said.

It was a no-brainer for Mangiapane. After a year of driving with the device, he now pays $90 a month for coverage, instead of the $140 he paid before. "It was worth it for me," he said.

How long the device must stay on the car varies from company to company and driver to driver. Some request just a few weeks, while others want it left on for a full year. The intent is to get a good look at the big picture, not just one day behind the wheel.

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