New Car Insurance Device Rewards Good Drivers

By Wayne Heilman, The Gazette, Colorado Springs, Colo.

Jun. 5--Progressive Insurance on Friday became the first auto insurer in Colorado to offer policies that base driver's rates on how, when and how much they drive, earning them either discounts of up to 25 percent or surcharges of up to 9 percent.

The usage-based system, which Progressive calls "MyRate," uses a small device that plugs into a special port in the customer's vehicle that measures the distance, time of day and way the vehicle is driven but not where or how fast. The company, the nation's fourth-largest auto insurer, introduced the system in 2004 in Michigan, Minnesota and Oregon and has expanded it to nine other states with plans to go nationwide within three years.

"We are seeing that one out of four customers that are offered this system accept it and the majority of customers using it end up with discounts averaging between 10 and 15 percent," said Richard Hutchinson, Progressive's general manager for the MyRate program.

Customers who sign up for the program get a 10 percent discount for the first six-month policy term and must pay a $30 technology fee to use the device, but Hutchinson said the discount more than offsets the fee. Customers who don't get enough of a discount to offset the fee or end up with a surcharge because of their driving habits can opt out of the usage-based rating system without any adverse effect on their rates, he said.

Progressive "really is a pioneer in using this technology. This is a no-lose proposition for low-mileage or good drivers and it allows consumers to opt in and opt out," said Carole Walker, executive director of the Rocky Mountain Insurance Information Association in Denver.

The rating system is currently available only through independent insurance agents. It will be available by mid-August through Progressive's Web site and by phone. For more information, go to www.myrate.com.