Tracking devices to cut car insurance rates

A new concept in determining auto insurance bills is coming to the state with the nation’s highest average rates: pay-as-you-drive.

For the first time, a New Jersey auto insurance company wants to equip cars with high-tech devices that constantly track motorists’ driving habits to determine how much they should pay.

Starting Aug. 8, Progressive Corp. will offer discounts to its 127,000 Garden State drivers if they install in their cars wireless devices that tell the insurer how many miles they drive, what time they’re out on the road, and how often and how fast they accelerate and hit the brakes.

The company is dangling 60 percent rate discounts for the best drivers. Those who quickly rev up or slam their brakes, however, could face surcharges as high as 9 percent.

New Jersey will be only the fifth state with the pay-as-you-drive devices offered by the insurer.

“This is definitely the wave of the future,” said Loretta Worter, vice president of the Insurance Information Institute. “More and more companies are getting on board with tracking devices, seeing they offer a lot of advantages to consumers.”

Supporters of the idea say it reduces traffic because drivers want to keep their miles down. They say it improves drivers’ safety habits and cuts air pollution. They also contend it’s fairer than other new ways to charge motorists, such as basing rates on motorists’ jobs, credit scores or level of education. But others worry the devices are akin to having Big Brother riding shotgun.

“It’s a good idea for some people. It’s not for everybody,” said Richard Hutchinson, general manager of usage-based insurance for Progressive. “People need to think about this in their own situation.”

The insurer does not use how fast motorists drive as one of its rating factors and the company does not rat out speeders to the police, Hutchinson said.

In other states, about one-third of the company’s customers have enrolled and they are saving about 10 to 15 percent. New Jersey drivers pay an average of $1,184 per car in auto insurance premiums — highest in the nation, according to the latest statistics.

Hutchinson said the company can offer discounts because drivers are safer when they know they’re being monitored. Motorists may quit the program at any time.

The pocket-sized sensors, with the wireless transmitting capability of cell phones, are plugged into onboard diagnostic ports in cars dating back to 1996 models. Each day, they signal to Progressive computers about miles driven, when drivers are on the road and how they brake or accelerate.

“We’re supportive of a method that actually looks at miles driven,” said Stephen Carrellas, representative of the New Jersey chapter of the National Motorists Association. “Basically, the more you drive, the more you have a chance to be in an accident.”

J. Robert Hunter, director of insurance for the Consumer Federation of America, said he generally views “pay-as-you-drive” insurance plans as good for motorists but worries that tracking what time they drive could penalize low-income drivers working late-night shifts.

A recent Brookings Institution study found that if all drivers paid for insurance based on miles driven, overall driving would drop 8 percent in the nation and 13.5 percent in New Jersey. It would reduce total carbon emissions by about 2 percent, the study found.

“Going easy on the peddle and easy on the brakes not only helps safety, but also the environment,” said Mike Replogle, transportation director for the Environmental Defense Fund.

But Charles Samuelson, executive director of the ACLU of Minnesota, a state where the device is used, worries about privacy.

“We see this as kind of a creeping abduction of people’s data,” he said. “Basically, once they collect that data, it belongs to the insurance company. That’s a big problem.”

Progressive’s Hutchinson admits privacy has been a concern since the program started with a pilot project in 1999. He said the devices do not include GPS locators that would enable the company to track every movement. “The primary concern that comes up is: ‘Are you tracking my whereabouts?’” he said.

Just like car owners with EZ-Pass toll transponders, drivers with computers may obtain access to all monitoring data online and see how they compare with others in the state, he said. While the data is subject to subpoenas or court orders, so far the company hasn’t received any. The company does not sell the data to third-party marketers.

Allstate, New Jersey’s second largest insurer, is testing devices that monitor traffic and attempt to avoid accidents. A few other companies that do not do business in New Jersey also electronically track driving behavior.

* All states and the District of Columbia have adopted 21 as the legal drinking age.

* All states have more stringent restrictions for drivers under the age of 21, ranging from zero tolerance to a limit of 0.02 BAC.

* A death is considered alcohol-related when any person involved in the accident had some measure of alcohol in his or her blood, even if it was below the legal limit.

* There is an alcohol-related traffic death in the United States every 30 minutes and an injury every 2 minutes.

* In 2006, 17,602 traffic deaths were alcohol-related, up slightly from 17,590 in 2005.

* In 2006, 41 percent of all traffic fatalities were alcohol-related, up from 40 percent in 2005.

* A major factor in the long-term downward trend in alcohol-related fatalities is the enactment, beginning in the 1980s, of state laws designed to deter drunk driving such as:

– Requiring persons to be at least 21 years old before they can purchase alcohol

– Mandatory drivers license revocation when a driver’s BAC level is above the state’s legal limit

– Lowering the legal BAC level to 0.08

– Prohibiting open containers of alcoholic beverages in motor vehicles

– Increasing measures to prevent underage drivers from obtaining alcohol

– Canceling the vehicle registration of drivers who have had their licenses suspended or revoked due to alcohol-related offenses

– Instituting sobriety checkpoints

Here is a breakdown of how states treat drunk driving violations:

(1) On-the-spot drivers license suspension or revocation if BAC is over the legal limit or the driver refuses to take a BAC test.
(2) Mandatory penalty for violation of the implied consent law, which means that drivers who refuse to take a breath alcohol test when stopped or arrested for drunk driving will have their license revoked or suspended.
(3) Prohibits unsealed alcohol containers in motor vehicle passenger compartments for all occupants. Arresting officer not required to witness consumption.
(4) Applies only to the driver.
(5) With limitations or conditions.
(6) Not specifically for drunk driving; Attorney General has established a no plea bargain policy.
(7) Administrative license suspension lasts until prosecution is complete.

Source: U.S. Department of Transportation, National Highway Traffic Safety Administration; Insurance Institute for Highway Safety; Property Casualty Insurers Association of America; Insurance Information Institute.

Increased reliance on cell phones has led to a rise in the number of people who use the devices while driving. There are two dangers associated with driving and cell-phone use, including text messaging. First, drivers must take their eyes off the road while dialing. Second, people can become so absorbed in their conversations that their ability to concentrate on the act of driving is severely impaired, jeopardizing the safety of vehicle occupants and pedestrians. Since the first law was passed in New York in 2001 banning hand-held cell-phone use while driving, there has been debate as to the exact nature and degree of hazard. The latest research shows that while using a cell phone when driving may not be the most dangerous distraction, because it is so prevalent it is by far the most common cause of this type of crash and near crash.

RECENT DEVELOPMENTS

* Studies: Studies about cell-phone use while driving have focused on several different aspects of the problem. Some have looked at its prevalence as the leading cause of driver distraction. Others have looked at the different risks associated with hand-held and hands-free devices. Still others have focused on the seriousness of injuries in crashes involving cell-phone users and the demographics of drivers who use cell phones. Below is a summary of some recent research on the issue.

* In July 2007 the National Highway Traffic Safety Administration and the National Center for Statistics and Analysis released the results of their National Occupant Protection Use Survey (NOPUS), which found that in 2006 5 percent of drivers used hand-held cell phones, down from 6 percent in 2005, the first decline since the survey began tracking hand-held cell phone use in 2000. The decline in use occurred in a number of driver categories, including female drivers (down from 8 to 6 percent), drivers in the Midwest (down from 8 to 4 percent), drivers age 25 to 69 (down from 6 to 4 percent) and drivers of passenger cars (down from 6 to 4 percent) to name but a few. NOPUS is a probability-based observational survey. Data on driver cell-phone use were collected at random stop signs or stoplights only while vehicles were stopped and only during daylight hours.

* A survey of dangerous driver behavior was released in January 2007 by Nationwide Mutual Insurance Co. The survey of 1,200 drivers found that 73 percent talk on cell phones while driving. Cell phone use was highest among young drivers.

* Text messaging, or “texting” by teens, a driving distraction related to cell phone use, was the subject of an August 2006 Teens Today survey conducted by the Liberty Mutual Research Institute for Safety and Students Against Destructive Decisions (SADD). The survey showed that teens considered sending text messages via cell phones to be their biggest distraction. Of the teens surveyed, 37 percent said that text messaging was extremely or very distracting, while 20 percent said that they were distracted by their emotional states and 19 percent said that having friends in the car was distracting. The January 2007 survey by Nationwide found that 19 percent of motorists say they text message while driving.

* Motorists who use cell phones while driving are four times as likely to get into crashes serious enough to injure themselves, according to a study of drivers in Perth, Australia, conducted by the Insurance Institute for Highway Safety. The results, published in July 2005, suggest that banning hand-held phone use won’t necessarily improve safety if drivers simply switch to hand-free phones. The study found that injury crash risk didn’t vary with type of phone.

* Many studies have shown that using hand-held cell phones while driving can constitute a hazardous distraction. However, the theory that hands-free sets are safer has been challenged by the findings of several studies. A study from researchers at the University of Utah, published in the summer 2006 issue of Human Factors, the quarterly journal of the Human Factors and Ergonomics Society, concludes that talking on a cell phone while driving is as dangerous as driving drunk, even if the phone is a hands-free model. An earlier study by researchers at the university found that motorists who talked on hands-free cell phones were 18 percent slower in braking and took 17 percent longer to regain the speed they lost when they braked.

* A September 2004 study from the NHTSA found that drivers using hand-free cell phones had to redial calls 40 percent of the time, compared with 18 percent for drivers using hand-held sets, suggesting that hands-free sets may provide drivers with a false sense of ease.

* A study released in April 2006 found that almost 80 percent of crashes and 65 percent of near-crashes involved some form of driver inattention within three seconds of the event. The study, The 100-Car Naturalistic Driving Study, conducted by the Virginia Tech Transportation Institute and the National Highway Traffic Safety Administration (NHTSA), breaks new ground. (Earlier research found that driver inattention was responsible for 25 to 30 percent of crashes.) The new study found that the most common distraction is the use of cell phones, followed by drowsiness. However, cell-phone use is far less likely to be the cause of a crash or near-miss than other distractions, according to the study. For example, while reaching for a moving object such as a falling cup increased the risk of a crash or near-crash by nine times, talking or listening on a hand-held cell phone only increased the risk by 1.3 times. The study tracked the behavior of the 241 drivers of 100 vehicles for more than one year. The drivers were involved in 82 crashes, 761 near-crashes and 8,295 critical incidents.

* These findings confirm an August 2003 report from the AAA Foundation for Traffic Safety that concluded that drivers are far less distracted by their cell phones than by other common activities, such as reaching for items on the seat or glove compartment or talking to passengers. That study was based on the analysis of videotapes from cameras installed in the vehicles of 70 drivers in North Carolina and Pennsylvania.

* State and Federal Initiatives: The number of state legislatures debating measures that address the problem of cell-phone use while driving and other driver distractions continues to rise. As of March 2008 four states — Connecticut, New Jersey, New York and Utah — plus the District of Columbia had laws on the books banning the use of hand-held cell phones while driving. Similar laws in California and Washington State go into effect in July 2008. Except for Utah and Washington State, the laws are all “primary enforcement,” meaning a motorist may be ticketed for using a hand-held cell phone while driving without any other traffic offense taking place.

* About 17 states have passed laws banning or restricting young drivers from using cell phones. The most recent state to enact such legislation is California. But the California law goes farther than any other state’s. It bans the use of any mobile device by drivers under age 18. This includes a cell phone, a broadband personal communication device, specialized mobile radio device, handheld device or laptop computer.

* In May 2007 Washington become the first state to ban the practice of texting with a cell phone while driving; New Jersey passed a similar law that took effect on March 1, 2008. In Washington, the fine for DWT (driving while texting) is set at $101, but since it is a secondary offense a driver must be pulled over for some more grievous infraction before the penalty can be imposed. In New Jersey the fine for DWT is $100, but the state has made the offense one of primary enforcement (see above). In Connecticut drivers can be fined $100 not only for using a cell phone, but those pulled over for speeding or other moving violations can be fined for other driving distractions such as putting on makeup or turning to discipline children in the back seat. In New York, the first state to enact such legislation, in 2001, drivers face fines of $100 for the first violation, $200 for the second and $500 thereafter.

* Businesses: Businesses are increasingly prohibiting workers from using cell phones while driving to conduct business. Exxon Mobil and Shell are examples of large companies that ban employees’ use of any type of cell phone while driving during work hours. The California Association of Employers recommends that employers develop a cell phone policy that requires employees to pull off the road before conducting business by cell phone.

* Court Decisions: In December 2007 International Paper Co. agreed to pay a $5.2 million settlement to a Georgia woman who was rear-ended by one of its employees. The employee was driving a company car and talking on a company cell phone at the time of the accident. The settlement was reached even though the employee had violated her company’s policy of requiring the use of hands-free headsets while driving. The suit is among the most recent of several cases where an employer has been held liable for an accident caused by a driver using a cell phone. (See background section on Employer and Manufacturer Liability.)

BACKGROUND

Cell phones play an integral role in our society. However, the convenience they offer must be judged against the hazards they pose. Inattentive driving accounted for 6.4 percent of crash fatalities in 2003—the latest data available—according to the U.S. Department of Transportation. Inattentive driving includes talking, eating, putting on make up and attending to children. Using cell phones and other wireless or electronic units are also considered distractions.

As many as 40 countries may restrict or prohibit the use of cell phones while driving. Countries reported to have laws related to cell phone use include Australia, Austria, Belgium, Brazil, Botswana, Chile, the Czech Republic, Denmark, Egypt, Finland, France, Germany, Greece, Hungary, India, Ireland, Israel, Italy, Japan, Jordan, Kenya, Malaysia, the Netherlands, Norway, the Philippines, Poland, Portugal, Romania, Russia, Singapore, the Slovak Republic, Slovenia, South Africa, South Korea, Spain, Sweden, Switzerland, Taiwan, Turkey, Turkmenistan, the United Kingdom and Zimbabwe. Most countries prohibit the use of hand-held phones while driving. Drivers in the Czech Republic, France, the Netherlands and the United Kingdom may use cell phones but can be fined if they are involved in crashes while using the phone. Drivers in the United Kingdom and Germany also can lose insurance coverage if they are involved in a crash while talking on the phone.

Supporters of restrictions on driving while using a cell phone say that the distractions associated with cell phone use while driving are far greater than other distractions. Conversations using a cell phone demand greater continuous concentration, which diverts the driver’s eyes from the road and his mind from driving. Opponents of cell phone restrictions say drivers should be educated about the effects of all driver distractions. They also say that existing laws that regulate driving should be more strictly enforced.

Employer and Manufacturer Liability: Although only a handful of high-profile cases have gone to court, employers are still concerned that they might be held liable for accidents caused by their employees while driving and conducting work-related conversations on cell phones. Under the doctrine of vicarious responsibility, employers may be held legally accountable for the negligent acts of employees committed in the course of employment. Employers may also be found negligent if they fail to put in place a policy for the safe use of cell phones. In response, many companies have established cell phone usage policies. Some allow employees to conduct business over the phone as long as they pull over to the side of the road or into a parking lot. Others have completely banned the use of all wireless devices.

In an article published in the June 2003 edition of the North Dakota Law Review, attorney Jordan Michael proposed a theory of cell phone manufacturer liability for auto accidents if they fail to warn users of the dangers of driving and talking on the phone at the same time. The theory holds that maker liability would be similar to the liability of employers who encourage or demand cell phone use on the road. Holding manufacturers liable would cover all persons who drive and use cell phones for personal calls. Michael notes that some car rental agencies have already placed warnings on embedded cell phones in their cars.

In the meantime, here are the minimal amounts you need in place not to end up in jail.

We always feel a little uncomfortable listing legal requirements on a webpage. What happens when this page gets archived, the laws change and someone finds it on a google search 10 years from now. Hate to be the source of bad data. So, keep in mind that the numbers here are from the insurance information institute and were accurate as of mid 2008.

(1) The first two numbers refer to bodily injury liability limits and the third number to property liability. For example, 20/40/10 means coverage up to $40,000 for all persons injured in an accident, subject to a limit of $20,000 for one individual, and $10,000 coverage for property damage.
(2) Low-cost policy limits for low-income drivers in the California Automobile Assigned Risk Plan are 10/20/3.
(3) Instead of policy limits, policyholders can satisfy the requirement with a combined single limit policy. Amounts vary by state.
(4) In addition, policyholders must also carry at least $1,000 for medical payments.
(5) May be waived for the policyholder but is compulsory for passengers.
(6) Basic policy (optional) limits are 10/10/5. Uninsured and under insured motorist coverage not available under the basic policy but uninsured motorist coverage is required under the standard policy.
(7) In addition, policyholders must have 50/100 for wrongful death coverage.

*Minimum coverage requirements will increase to 30/60/30 on January 1, 2011.

Source: Property Casualty Insurers Association of America; state departments of insurance.

There is a big difference between an insurance company canceling a policy and choosing not to renew it. Insurance companies cannot cancel a policy that has been in force for more than 60 days except when:

* You fail to pay the premium
* You have committed fraud or made serious misrepresentations on your application
* Your driver’s license has been revoked or suspended.

Nonrenewal is a different matter. Either you or your insurance company can decide not to renew the policy when it expires. Depending on the state you live in, your insurance company must give you a certain number of days notice and explain the reason for not renewing before it drops your policy. If you think the reason is unfair or want a further explanation, call the insurance company’s consumer affairs division. If you don’t get a satisfactory explanation, call your state insurance department.

The company may have decided to drop that particular line of insurance or to write fewer policies where you live, so the nonrenewal decision may not be because of something you did. On the other hand, if you did do something that raised the insurance company’s risk considerably, like driving drunk, the premium may rise or you may not have your policy renewed.

If your insurance company did not renew your policy, you will not necessarily be charged a higher premium at another insurance company.

Protecting electrical connections is fairly easy. All you need to do is keep the connections clean, and apply dielectric grease to the metal parts to keep moisture from coming into direct contact with them. Dielectric grease, when applied correctly, will prevent almost all corrosion from starting.

Here’s how to do it:

First you’ll need to disconnect the plug or other electric component you will be protecting. If you’re doing more than one connection, I suggest doing one at a time to avoid confusion. Most automotive plugs will only go into the proper socket, but it can still get a little confusing.

With the metal connections visible, squeeze a small amount of dielectric grease onto a Q-Tip. Rub the grease over the entire metal surface of each connection. You don’t need very much to do the job, but be sure to get a good layer all over. Plug your connection back together and you are now protected from the green monster of corrosion.

The proportionally greater drop in personal injury and bodily injury claims as a percentage of all accidents is a further indication of the benefits of safety engineering in todays cars and roads.

On the flip side, the IRC study found that the actual cost of claims placed is growing at an average rate of 3% every year. The rising cost of repairs and medical treatment when accidents do happen has erased most of the underlying cost benefits gained by the drop in accident rates. Elizabeth Sprinkel, Senior VP of the IRC notes that if accident rates should start to return to their historic pace then increasing loss severity “will create upward cost pressure on consumers.”

So, if you want to see your auto insurance rates stay stable, lets be careful out there.

Here are some tips from carmaintenancetips.org for getting the most mileage from your tank:

Replacing air, oil, fuel filters and doing regular maintenance and service on your van will pay in the short, medium and long term. It will save you money in fuel costs, cut down on gas guzzling and make every gallon in your tank go further. The right grade of oil and optimal fuel type that your vehicle was designed for is best recommended to make the most of any van fuel economy strategy or plan that you want to implement and practically make a difference. Your owner’s manual will have more cues and clues as to make this part of the fuel equation work its magic for you.

Rotating, balancing and having tires optimally pressurized can also cut down on drag and make positive contributions to van fuel economy that you will feel in your pocket. You will start saving by the mile and gallon before you know it!

A great van fuel economy tip has to do with the wheels and tires. Yes, we can focus on the engine, oil, vehicle, driver’s driving habits and style, type of fuel etc., but something so significant can oftentimes be overlooked. Everyone wants to spend as little as they can for the gas that they put into the vehicle they drive. One good fuel economy tip is about tire maintenance. Not only should you be maintaining the engine of your car, you should also be paying attention the tires that you are driving on. Purchase a tire gauge and check your car’s tire pressure every month. Traveling on under-inflated tires will cause you to use up more gas and they wear out quicker. All resulting in higher costs for you, which is the last thing you want to hear when your ultimate focus is on van fuel economy!

For many the minivan is increasingly becoming the optimal choice for making the most of fuel efficiency, lowering consumption, emissions and not robbing your wallet dry at the pumps, while providing safety, reliability and performance at an affordable price. Not compromising on quality, price or value, not even with rising gas prices. Recent online statistics show the following:

§ 136,000,000+ passenger and commuter cars registered in the United States,

§ Travel distances on average of 12,000-18,000 miles (19,000-29,000km) annually

§ US cars for private use gobble upward of 90 billion gallons of gasoline every year which increases as we keep putting more of them on our roads.

In the light of these numbers, van fuel economy is a top priority and imperative for EVERYONE, not a mere luxury anymore for a chosen few! We can all do our part.

Get at least three price quotes. You can call companies directly or access information on the Internet. Your state insurance department may also provide a means to compare prices.

Get quotes from different types of insurance companies. Some sell through their own agents. Some sell through independent agents who offer policies from several insurance companies. Other companies sell directly to consumers over the phone or via the Internet. The price may vary depending on the sales method.

But don’t shop by price alone. You want a company that answers your questions and handles claims fairly and efficiently. Sources for finding the right kind of company include: word of mouth, i.e. friends, relatives, co-workers; your state insurance department, where you can find consumer complaint ratios by company; and consumer magazines. You can also check the financial health of insurance companies through independent rating companies.

Before you buy a car, compare insurance costs

Your premium is based in part on the car’s sticker price, the cost to repair it, its overall safety record and the likelihood of theft. Many insurers offer discounts for features that reduce the risk of injuries or theft, such as air bags, anti-lock brakes, daytime running lights and anti-theft devices.

For more information on car safety, check the Insurance Institute for Highway Safety.

Cars that are favorite targets for thieves cost more to insure. For more information on car theft, check the National Insurance Crime Bureau (NICB).

Ask for a higher deductable

Your deductible is the amount of money you pay out-of-pocket before your insurance policy kicks in. By requesting higher deductibles, you can lower your costs substantially. For example, increasing your deductible from $200 to $500 could reduce your collision and comprehensive coverage premium by 15 to 30 percent. Going to a $1,000 deductible can save you 40 percent or more. However, keep in mind that you’ll need to have the amount of the deductible on hand should something happen to your car.

Reduce coverage in older cars

Consider dropping collision and/or comprehensive coverage on older cars. It may not be cost-effective to continue insuring cars worth less than 10 times the amount you would pay for coverage. Any claim payment you receive would not substantially exceed your premiums minus the deductible. Claims occur on average only once every 11 or 12 years. Auto dealers and banks can tell you the worth of a car, or you can look it up online at Kelley Blue Book.

Buy your homeowners and auto coverage from the same insurer
Many insurers will give you a discount if you buy two or more types of insurance from them. Also, you may get a reduction if you have more than one vehicle insured with the same company. Some insurers reduce premiums for long-time customers. But shop around carefully; you may still save more money buying from a different insurance company even with the multi-policy discount.

Take advantage of low-mileage discounts
Some companies offer discounts to motorists who drive a lower than average number of miles per year. Low mileage discounts can also apply to drivers who carpool to work.

Ask about group insurance
You may be eligible to get insurance through a group plan from your employer, or through professional, business and alumni groups or other associations. Group plans often provide substantial discounts. Ask your employer, or any groups or clubs of which you are a member, about this option.

Maintain good credit
Your credit rating may affect what you pay for insurance, so monitor it carefully. You can get this information directly from the three major credit-rating agencies (Equifax, Experian, Trans Union). There are also various Web sites that allow you to check your credit rating and provide tips on how to improve your score.

Seek out safe driver discounts
Most insurance companies offer discounts to policyholders who have not had any accidents or moving violations for a number of years. You may also qualify for a cut if you have recently taken a defensive driving course, if you are over 50 and retired, or if there is a young driver on the policy who is a good student, has taken a drivers education course or is away at a college, generally at least 100 miles away.

When you comparison shop, be sure to inquire about discounts for the following (availability will vary according to the state and company):

• 1. • No accidents in 3 years
     • No moving violations in 3 years
     • Drivers over 50 to 55 years of age
     • Driver training course
     • Defensive driving course
     • Student drivers with good grades
     • College students away from home
     • $500 deductible
     • $1,000 deductible
     • Air bags
     • Anti-lock brakes
     • Daytime running lights
     • Anti-theft device
     • Low annual mileage
     • Auto and homeowners coverage with the same company
     • More than one car insured with the same company
     • Long-time customer

But don’t forget that the key to savings is not the discounts but the final price. A company that offers few discounts may still have a lower overall price.