Progressive Will Reduce Insurance Premiums if it Can Monitor Your Driving

Progressive Insurance has a new high-tech monitoring system that’s a gamble for drivers. Depending on how you drive, agreeing to install the device in your car could save you up to 60% on your insurance premiums — or cost you 9% more.

The device monitors driving habits including jackrabbit starts, sudden slamming on the brakes, fast acceleration and what time of day the individual is driving. All drivers who sign up for the program will be rewarded with an initial 10% reduction, with additional reductions (or increases) available depending on what the device tells Progressive about your driving habits.

A pilot program has been under way in Alabama, Oregon and Minnesota, with a nationwide launch rolling out throughout 2009. GMAC Insurance and OnStar vehicles offer a similar type of discount.

Programs like these still have their downsides and question marks. For instance, who decides what constitutes bad driving behavior? How many jackrabbit starts or sudden stops are you allowed before your premiums go up? After all, getting two speeding tickets doesn’t necessarily mean you're a bad driver, but it sure will cost you more in insurance.

Additionally, while the Environmental Defense Fund has praised the program on the basis that encouraging better driving habits can reduce traffic congestion, gas consumption and pollution, other groups have their doubts. Organizations that monitor civil liberty issues have concerns about motorists signing away personal information.

Although the monitoring system doesn’t track where you go in your car, the American Civil Liberties Union of Minnesota has warned drivers that once an insurance company has this information about you, it will own what is essentially a private record about you.

Insurer Offers Discounts to Drivers with Monitors (Detroit News)