Progressive Insurance wants Missouri customers to install a device in their cars to tell whether their driving is mild or wild. The gadget sends the data off to the insurance company through cell phone towers.

The carrot: Volunteers get a 10 percent cut in insurance rates, offset by a $60 annual technology charge. The company also holds out hope of a deeper premium cut — up to 30 percent — if Progressive finds that you drive gently and not very far.
Of course, the device also could report that you drive like a NASCAR wannabe, in which case your rates will go up. “If you drive excessively, or are a lead-foot, there could be a 9 percent surcharge,” said Richard Hutchinson, Progressive’s general manager for usage-based
insurance.

The devices, called “telematics,” are a coming thing in auto insurance. Safeco Insurance offers a device for teen drivers, called Teensurance. It tattles to their parents via computer and phone messages.

Safeco’s parent, Liberty Mutual, offers a system for commercial fleets called Onboard Advisor. Travelers Insurance is experimenting with such a system for private autos. GMAC Insurance offers lower rates for people who allow themselves to be tracked through the OnStar communications system in their cars.

The Progressive program, available in 19 states, now is being rolled out in Missouri. It isn’t offered in Illinois. It’s an option for customers, not a requirement, the company notes.

The device fits in the palm of a hand. It plugs into the car’s diagnostic port, which is often found under the steering wheel.

It records the time of day and mileage, and measures speed per second. From that, it can tell how fast you accelerate and how hard you brake. If you drive like a hot-rodder, scratching out at green lights and screeching to a halt behind traffic, the device will snitch on you, and up go your rates.

Nabbing you for speeding is a bit more difficult. The device doesn’t contain a global positioning system component, so it can’t tell exactly where you’re driving. You could be RELATED LINKS

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doing 60 miles per hour through city streets and Progressive won’t know it.

Unless you hit something, of course.

Timothy Goodwin, of Springfield, Mo., drives a company car for work. So, he put the Progressive gadget in his personal SUV. “My poor truck sits in the garage all the time,” he says. As a result of his low mileage, the company told him to expect an extra $48 cut in his $400 six-month insurance bill. “That could be a double-edged sword. If I was in sales and driving a lot, it might work against you,” he said.

Goodwin, 45, says the monitor makes him more careful. “It’s like having a police car behind you,” he said. “I don’t want them to think I’m tearing around town.”

Customers can review their behavior over their home computers. Goodwin was surprised to find that he’d been speeding for more than an hour during a trip to St. Louis.

Insurance companies hate night owls. Auto damage claims are highest between midnight and 5 a.m., and those hours count against you in Progressive’s system.

Theories about the wee-hours accident rate include low visibility, and the number of people tired or drunk. Even if you’re wide awake and sober, you may be driving near people who aren’t, notes Hutchinson.

Companies already use accident records, traffic tickets and even credit ratings, to assess a driver’s risk. They use mileage too, though it’s hard to verify without telematics. The devices add to the piles of information that insurance companies already have about drivers.

More advanced tracking systems are around the corner. The Liberty Mutual program for commercial fleets can tell if a driver is speeding. It uses GPS technology to track vehicles, and knows the speed limits on streets. It can tell if a driver is cornering too hard, as well as whether he’s accelerating and braking too fast.

Consumer advocates worry about what insurers will do with all that.

“The key is privacy,” said Jack Gillis, director of Public Affairs for the Consumer Federation of America. If the information is used for insurance rates only, that’s one thing. But if the insurer is selling it to other companies, that would be a troublesome, he says.

Would a divorce lawyer learn how often his client’s spouse is driving around after midnight? Progressive says it won’t distribute the information without the customer’s permission, except by court order.

The purpose of insurance is to spread risk: Everyone pays something in order to rescue the few people who will have major losses. But Gillis worries that insurers will learn so much about their customers that many drivers will be charged more than they can pay, negating the risk-sharing roll of insurance.

Some of those price hikes may be unfair. “If you’re driving to work at 11 at night, are you the same risk factor as a person who’s coming home from a party?” Gillis asks.