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February 12, 2013 1:00 AM

A test-drive of monitor for lower auto insurance rates

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(New York Times News Service)

Irecently installed a small wireless gadget under my car's dashboard that would monitor my driving. I wanted to see how it felt to have my driving behavior captured, sent to an insurance company and analyzed. More drivers, seeking discounts on auto insurance, are voluntarily doing just that.

Insurers are offering these discounts as they aim to abandon the crude proxies they have long used to guess the likelihood that a particular policyholder will have an accident. These have included age, sex, marital status, miles driven (as reported by the driver) -- and even credit scores, which can penalize those guilty of driving while poor.

Driving data is collected with a device that policyholders must be persuaded to install; it connects to the car's computer system via a diagnostic port found in all cars since 1996. Such "user-based insurance," the name for individualized pricing based on data collected from a vehicle, is spreading. Drivewise from Allstate is in 10 states; Drive Safe and Save, from State Farm, is in 27; and Snapshot, from Progressive, is in 43.

Progressive was the first in the field, in 1998, when it started offering customers a device that had to be professionally installed. Six years later, it introduced a device in three states that could be plugged in by the customer, but had to be unplugged at regular intervals and connected to a PC to upload the data. Wireless transmission came next.

In 2010, Progressive introduced Snapshot, which, unlike a predecessor, is offered without a threat of penalizing incautious drivers. Participating customers who drive without alarming tendencies will receive a discount of up to 30 percent; those with poor driving habits simply do not receive the discount. The company says that more than half of Snapshot participants earn discounts, which average 10 percent annually.

The Snapshot device records the time of day and distance traveled, along with the vehicle's speed, second by second. But Progressive deliberately left GPS out of the device so the car's exact location is not known; otherwise, more drivers might be nervous about using it.

Typically, Progressive collects data for only six months (that's the "snapshot"), after which the customer removes and returns the device. The discount can then continue indefinitely. The company reserves the right to take another snapshot later, such as after an accident.

The device in my car is a Drivewise unit that Allstate supplied so that I could see how it works.

The day after I installed it, I could log on to the Drivewise site and see graphs showing miles driven, the number of incidents of "hard braking" and "extreme braking" sensed by an accelerometer, how many miles were driven at more than 80 mph, and the number of miles driven at what times of day or night. That is all. The device is semiblind by design. It does not know what road I'm traveling or whether I'm stopping for a red light. It also remains oblivious to whether I'm going 70 mph in a 30 mph zone.

Allstate says the lowest-risk time for accidents is 5 a.m. to 11 p.m. on weekends, with the highest risk from 11 p.m. to 4 a.m. on weekdays and 11 p.m. to 5 a.m. on weekends. So I couldn't earn the maximum discount if I worked at a job that put me on the road in the highest-risk times.

"There is a very strong correlation between the driving behaviors we're monitoring and accidents," says Randy Birchfield, Allstate's vice president for product operations. Allstate says the discount for its participants also averages 10 percent.

I had thought I'd be uncomfortable knowing that the Drivewise gadget was accompanying me everywhere. But that wasn't the case -- perhaps because my driving behavior was translated into charts with innocuous titles like "miles driven" and "braking events." The data can be used in post-accident investigations and litigation, however, so I wonder how innocuous it would all look in court in the hands of a plaintiff who has sued me.

"Today, the better drivers are the ones who are opting in" to user-based insurance, says Shamik Lala, a manager at A.T. Kearney, the consulting firm.

In places where user-based insurance is now available, drivers are voluntarily choosing it in large numbers because, Lala says, "we all think we're above-average drivers."