Like in Lake Wobegon, the fictional place where all the children are above average, most people think they're above-average drivers.
Of course, everybody cannot be. But today you can prove whether you are and save money in the process.
Those who are truly safe drivers — and especially those who drive very few miles — might consider new voluntary auto insurance programs that give discounts based on electronic monitoring of driving habits.
Devices attached to your vehicle can measure how many miles you drive, when you drive, how fast you go and how hard you accelerate, brake and corner. They are called " telematic" devices, and the programs are generically termed "usage-based" or "pay-as-you-drive" insurance.
The idea is that cautious drivers who travel fewer miles should pay lower insurance premiums because they're less likely to be in an auto accident.
However, the big downside is relinquishing privacy — allowing your insurance company to compile all that information about your driving habits.
Should you ask your auto insurance agent about installing a telematic device to get discounted premiums? Here are questions and answers to help you decide.
What is it? Typically, the insurer will mail you a small telematic device, which you install by plugging it into your car's onboard diagnostic port (the OBD-II port), which in most cars is under the dashboard, near the steering column. Devices are generally compatible with vehicles built in the mid-1990s and later.
People might think using a telematic device is difficult, but the one from Progressive, for example, fits in the palm of your hand and is easily installed, said Richard Hutchinson, usage-based insurance business leader at Progressive. "It's easier than people think it is," he said. "It's a chance to make insurance more personal."
Devices and programs differ, but a typical telematic automatically transmits your driving data wirelessly, via wireless phone networks, to your insurer. Some insurers allow customers to view their own data on a website.
Driving data is added to the formula an insurer uses to calculate your insurance premium, along with traditional measures, such as age, gender, vehicle type and where you live.
Programs go by different names. Progressive has Snapshot, State Farm has Drive Safe & Save with In-Drive and Allstate has Drive Wise, for example.
State Farm's program, available in 14 states and not yet aggressively marketed, can be used through General Motors' OnStar and Ford's Sync information services. Both record only mileage and not driving habits. Or you could join the insurer's own Drive Safe & Save with In-Drive program for about $5 to $15 per month, which requires a separate telematic device that not only provides services — such as roadside assistance and one-touch emergency response — but can also measure such driving habits as speed, acceleration, braking and cornering.
What are the advantages? A discount on your auto insurance premium.
It makes sense that if your actual driving habits are lower risk, you should pay less — otherwise you're essentially subsidizing high-risk drivers.
Of course, most people think they are low risk. A poll by Progressive, which has the most mature telematics program in the U.S. and is available in 42 states, showed 84 percent of drivers define their driving habits as "cautious" or "defensive."
How big is the discount? Progressive says 70 percent of more than 1 million drivers who signed up for its Snapshot program end up paying less for their insurance, saving about $150 per year. "It's been amazingly popular," Hutchinson said. "We're seeing a quarter or more of people signing up for it."
The largest U.S. auto insurer, State Farm, claims usage-based discounts of up to 50 percent off your auto insurance. However, a more typical discount is 10 percent, State Farm spokesman Dick Luedke said.
Allstate's Drive Wise, only available in seven states so far, claims customers could reap discounts of "up to 30 percent." Customers get 10 percent off their first policy period just for signing up.
The good news is that if the telematic device determines you're a lousy driver, your rates probably won't go up. Information is generally used only to lower rates through discounts.
