Minnesota drivers will begin testing a pilot program for usage-based auto insurance sponsored by Progressive Insurance starting August 16. Participants will use a data-logging device in their car to measure how much, how fast and when they drive.
Once installed, the matchbox-sized device, called TripSensor, records how much, how fast and when the vehicle is driven. This information is used to calculate the discount the customer may receive when they renew their policy.
TripSensor also collects information about rapid acceleration and braking that is not currently used to calculate the discount. Progressive is collecting this information to better understand if it is predictive of future accidents.
Toward the end of each policy period, customers use software provided by Progressive to download their driving data to a personal computer where they can view it to better understand the discounts they have earned and to upload the data to the company.
Participants may be eligible for a "usage discount" of up to 15 percent based on how much and when the vehicle was driven. And, an additional five percent can be added to or subtracted from the usage discount depending upon what percent of time the vehicle was driven slower than 75 mph.
Progressive tested this usage-based insurance discount program in Minnesota in early 2004 when it offered 250 drivers $25 to plug a data logging device into their vehicles to collect information for 30 days, upload their data to Progressive and complete a survey about the experience.
In the test, a discount on future policy periods was not offered, but had it been, the average member of the test group would have been eligible for a 7.5 percent discount on the registered vehicle in the next policy period.