More than 70 million drivers in the U.S. potentially are leaving car insurance savings on the table by not taking advantage of usage-based insurance programs that reward drivers who drive safely and during safe times of the day.
More and more carriers are providing usage-based or mileage-based insurance options, including telematic systems or devices that monitor insureds’ driving and mileage habits.
Progressive Insurance, a pioneer in the field which sells its own usage-based product called Snapshot, said it has found that drivers who drive less, more safely and during safer times of day are most likely to earn a discount.
Progressive commissioned Harris Interactive for a telephone survey of 1,003 U.S. adults in August to determine how many drivers might be missing out on discounts available through usage-based rating. Among the findings from the survey:
•50 percent of respondents say they drive less than 12,000 miles per year, even lower than the national average of 13,476 miles per year;
•84 percent of drivers define themselves as cautious (49 percent) or defensive (39 percent); and
•88 percent are never or rarely on the road between the hours of midnight to 4 a.m. – the most dangerous hours to drive as defined by Progressive.
When all three of these driving behaviors are considered, 39 percent of all U.S. drivers – or more than 70 million drivers – may be eligible to receive a discount on their car insurance, according to the Progressive survey findings.
“Good drivers should pay less for their car insurance – that’s something nearly everybody can agree on,” said Richard Hutchinson, general manager of usage-based insurance at Progressive. “Our data shows that more than 70 percent of all Snapshot drivers now enjoy extra savings, which is one reason why our program continues to grow so quickly.”
Snapshot rewards safe drivers with a discount of up to 30 percent on car insurance. Discounts are based on real-time collection of a customer’s driving habits using a telematic device that plugs into a car’s onboard diagnostic port.
Progressive is not the only insurer offering mileage-based car insurance. Safeco, Travelers, and others have similar offerings or are preparing to offer them.
“I can’t get through a week without having two or three more insurers asking to get more info about usage-based insurance in general or [our program] Drive Ability,” Robin Harbage, Towers Watson, recently told Insurance Journal and MyNewMarkets.com. Towers Watson provides insurers with the technology for usage-based programs. “It is the hottest thing going on in auto insurance and everybody is realizing how it is changing insurance.”
Harbage estimates that at least 60 percent of auto insurers have a UBI system in place in at least one state, and that number is growing.
According to Progressive, customers in its Snapshot program who have earned discounts have already saved more than $30 million, an average of about $150 per driver per year.
The Progressive survey found that 63 percent of American drivers would allow their auto insurer to gather this real-time information if it led to possible savings.
Progressive said that its own analysis of more than one million daily trips and nearly 3 billion driving miles suggests that not only do safe drivers save money with Snapshot, but Snapshot customers are 20 percent less likely to receive a ticket for a moving violation and 10 percent less likely to be in an accident.