By DIANE JENNINGS / The Dallas Morning News
Drivers who don’t mind an insurance company peering over their shoulder as they cruise down the highway may benefit from a new type of insurance policy debuting in Texas this week.
But anyone bothered by the specter of Big Brother may want to steer clear.
On Tuesday, Texas will become the 15th state where Progressive Insurance offers a program that adjusts individual rates every six months based on driving habits. Those habits are monitored by a wireless device about the size of a cigarette pack that relays information to the insurer about what time of day the car is being driven, how far it travels, and how smoothly the driver starts and stops.
Former Dallasite Tim Goodwin, who now lives in Missouri, where the program has been offered for several months, is a fan of the new offering. “I’m 45 years old and I drive responsibly,” said Goodwin, whom Progressive provided to reporters for an interview, “And you know what? I want them to know how well I’m driving and how little I’m driving. It works out; it really does make sense to charge people based on how many miles they’re driving and not just their credit report.”
Goodwin says he saved $60 on his last policy renewal.
Steven McKay, products manager for Progressive, estimates that most drivers save 10 to 15 percent. Poor drivers may end up being charged higher rates, but they can opt out of the program, he said.
The new program is “a good option to have” for some drivers, said Deeia Beck, public counsel for the state Office of Public Insurance Counsel, a consumer advocacy agency. But she cautioned that potential customers need to make “an honest appraisal” of their driving habits.
One other Texas company offers a pay-by-the-mile plan, Johns said, in which customers are charged based on the mileage they drive, but Progressive takes other factors into account.
“How often do you drive after midnight?” McKay said. “If you drive after midnight once a week or more, the program might not be good for you. Driving after midnight can be really dangerous.”
In addition, the company looks at “what we’re calling ‘hard brake,’ ” McKay said. “If your car slows down rapidly a lot, that’s bad.”
Customers who sign up for the MyRate program receive an initial discount of up to 10 percent, but they are charged a $5-a-month “technology expense” fee to cover the cost of the device. When setting the initial rate, all of the old rules still apply.
“We still establish a rate according to the old traditional ratings factors – age, gender, marital status, accident violations, the kind of car you drive,” McKay said.
After six months, information gleaned by the monitor is factored into the renewal rate.
But drivers don’t have to wait to see how they’re doing. They can check on their habits online at any time and adjust them accordingly. Goodwin said he realized he needed to adjust his cruise control slightly because the report showed he was exceeding the speed limit.
He also noted that information gathered by the company cannot be used in an accident investigation without the driver’s permission.
But Beck, a lawyer, wasn’t so sure about that. “They may not use it against their own insured,” she said. “But let’s say you’re a Progressive customer, you’re the at-fault driver, and these records are available. I’m sorry, but the opposing attorney is going to subpoena records, and it’s not necessarily a done deal whether that’s going to be admissible.”