Esurance Pay Per Mile is the latest entry into the pay-as-you-drive (PAYD) car insurance market, promising savings to those who log less than 10,000 miles a year.
To get the benefits of a PAYD discount, your car must be:
- A 1996 or later model equipped with an onboard diagnostics (OBDII) port that accepts a telematics device plug-in. You will find the port underneath the dashboard near your steering wheel. Plug-in devices typically gather information such as mileage, speed, time of day and braking events.
- Equipped with an onboard telematics systems such as OnStar or Sync, which typically report mileage only.
Let's take a brief look at what's currently offered if you're considering the PAYD route:
Progressive's Snapshot: The way Snapshot works is typical -- you plug in the OBDII device, which then tracks time of day and vehicle speed, how many miles you drive and how often you brake hard. Consumers should also be aware that Progressive is considering the controversial move of adding the routes that you drive to the mix of factors that determine discounts. The insurer says savings could reach 30 percent for the most conscientious motorists. Progressive adds that it's best if your car stays parked during peak accident hours (between midnight and 4 a.m.). The device must be installed for at least 30 days to generate a driving profile and can be “test driven” for 30 days without being a Progressive customer. Most states offer Snapshot; those that don't are Alaska, California, Hawaii, Indiana and North Carolina.
Allstate's Drive Wise: After a recent expansion push, the product is now available in 30 states, including Arizona, New York, Oregon, Washington and Pennsylvania. A plug-in device records the usual motoring statistics, which are used to determine if customers qualify for a 10 percent discount for the first policy term. If drivers maintain safe motoring habits and low mileage during subsequent terms, savings can reach 30 percent, according to the company.
State Farm's Drive Safe & Save and In-Drive: You need an OnStar or SYNC subscription for Drive Safe & Save. State Farm receives odometer readings from OnStar every 30 days after you enroll and, after six months, adjusts your premium to reflect the mileage. The company says discounts usually range from 10 to 50 percent depending on mileage. The insurer also offers In-Drive, which uses an OBDII plug-in to track time of day and vehicle speed, how many miles driven and how often you brake hard. State Farm says you immediately receive about a 5 percent discount on premiums through In-Drive. More discounts may be if you stay below 12,000 miles a year, the national average.
The Hartford's TrueLane: A plug-in device records relevant motoring information and transmits it to the insurer by its partner, Octo USA Inc., over that firm's cellular network. You get a 5 percent discount by enrolling. After driving for 75 days, your premium could drop by as much as 25 percent, depending on how safely you drive. TrueLane is now offered in Arizona, Arkansas, Colorado, Connecticut, Idaho, Illinois, Iowa, Maryland, Minnesota, Missouri, Nevada, New Hampshire, New Mexico, New York, Oklahoma, Oregon, South Carolina, Vermont, Virginia, West Virginia and Wisconsin.
Travelers' IntelliDrive: You can receive an immediate discount of up to 5 percent by installing this telematics device. IntelliDrive -- which is so far available in Alabama, Connecticut, Indiana, Illinois, Maine, Ohio, Oregon and Virginia -- can reduce premiums by as much as 20 percent for the best drivers, according to Travelers.
Esurance's DriveSense: DriveSense, a plug-in device, transmits details through Sprint's wireless network to Esurance, which determines if drivers qualify for discounts up to 30 percent. Esurance has expanded the availability of DriveSense the past year; it's now available in Arkansas, Arizona, Idaho, Iowa, Illinois, Massachusetts, Nebraska, Rhode Island, South Dakota and Texas.
Esurance Pay Per Mile: Under this plan, a plug-in device monitors your mileage, and you pay a base rate and per-mile charge each month. It is currently only available in Oregon. The company says you will save money on your rate if you drive less than 10,000 miles a year.
Safeco's Rewind: The company, which is owned by Liberty Mutual, offers a PAYD for motorists who are paying higher insurance rates because of traffic tickets or accidents. A device monitors their driving and keeps a record of the usual details. After four months, the record is evaluated by Safeco, which may reduce or eliminate the premium increases that came because of the prior accidents or violations. There isn't a fee to use Rewind, but it's not available in every state. Safeco suggests contacting an agent to see if you qualify.
GMAC Insurance's Low Mileage Discount: GMAC, now known as National General Insurance, offers two paths to a discount. Its plug-in monitors much the same data as others do -- speed, braking, mileage and when a vehicle is driven. The company also offers the option of reporting mileage though OnStar. The rate cuts range from 13 percent for those who drive 15,000 miles a year to 50 percent for those who drive less than 2,500. The Low-Mileage Discount program is offered in 35 states.
American Family Insurance: The insurer recently completed its testing of a PAYD model based on a plug-in device. Spokesman Steve Witmer said the research is being evaluated, with the hope that a product will soon be available to customers.
Metromile: A plug-in device tracks just your mileage and you're billed a monthly base rate plus your per-mile charge. You can pay 40 to 50 percent less than you would using a traditional insurance plans, if you drive less than 5,000 miles a year, according to the company. Currently only available in California, Illinois, Oregon and Washington.
|Car insurance company||Discount||What's measured||Availability|
|Allstate Drivewise||Up to 30%||Speed, braking, mileage and time you drive||AR, AZ, CO, CT, FL, ID, IL, IN, KS, KY, LA, MD, MI, MN, MO, MS, MT, NJ, NM, NV, NY, OH, OK, OR, PA, TN, UT, VA, WA and WI|
|Esurance DriveSense||Up to 30%||Speeding, braking, mileage and time you drive. mileage, speed, acceleration, time/date and location||AK, AZ, ID, IA, IL, MA, NE, RI, SD and TX|
|GMAC/National General Insurance Low-Mileage Discount||Up to 50%||Mileage||AL, AZ, CO, FL, GA, ID, IL, IN, KY,LA, MD, MI, MN, MS, MO, MT, NE, NV, NH, NM, NY, OH, OK, OR, PA, RI, SC, SD, TN, TX, UT, VA, WA, WV, WI|
|Metromile||Average yearly savings of $500||Mileage||CA, IL, OR and WA|
|Progressive Snapshot||Up to 30%||Hard braking, mileage and time you drive||Not available in AK, CA, HI, IN and NC|
|Safeco Rewind||Varies||Speed, braking and mileage||Varies|
|State Farm Drive Safe & Save: In-Drive||Up to 50%||Braking, acceleration, turns, speeds over 80 mph and time you drive||All states except MA and RI|
|State Farm Drive Safe & Save: OnStar||Up to 50%||Mileage||All states except MA and RI|
|State Farm Drive Safe & Save: SYNC||Up to 50%||Mileage||All states except MA and RI|
|The Hartford TrueLane||Up to 25%||Trip distance, duration, acceleration and braking||AL, AZ, AR, CO, CT, ID, IL, IA, MD, MN, MO, NV, NN, NM, NY, OK, OR, SC, VT, VA, WV and WI|
|Travelers IntelliDrive||Up to 30%||Speed, braking, mileage and time you drive||AL, CT, IN, IL, ME, OH, OR and VA|
|Esurance Pay Per Mile||TBD||Mileage||OR|
What drivers think about pay-as-you-drive car insurance
Would you ever consider trying a pay-as-you-drive car insurance plan?
Among those who answered no: Why are you unwilling to try a pay-as-you-drive plan?
Does driving over the speed limit hurt your pay-as-you drive discount? (the correct answer is no)
Methodology: CarInsurance.com commissioned a survey of 2,000 U.S. adults; the survey was fielded in June 2014.
5 pay-as-you-drive-insurance myths
Myth 1: Speeding will hurt my car insurance discount.
Three quarters of survey respondents said that typically pay-as-you-drive programs track speed, and 86 percent said in almost all cases, exceeding the speed limit would cut the pay-as-you-drive discount.
But in reality some programs don't include speed as a factor in calculating the discount. Progressive's Snapshot program, for instance, uses three factors -- how often you hit the brakes hard, how many miles you drive and how frequently you drive between midnight and 4 a.m.
Even programs that track speed don't compare how fast you're driving to the posted speed limits. The devices don't know, for instance, when you're traveling 45 mph in a 15 mph zone.
Some programs, such as Allstate's Drivewise and State Farm's Drive Safe & Save In-Drive programs, do monitor speed, but your discount is hurt only when you drive at or above 80 mph. Like Progressive, Allstate also considers hard braking, time of day when driving and mileage. State Farm monitors those factors as well as turns and acceleration.
"We calculate a risk factor based on the percentage of miles that your vehicle logs at speeds at or above 80 mph," Allstate says. "We chose 80 mph as the threshold based on our risk models, which suggest that accidents are significantly more likely and more damaging at these speeds."
Myth 2:Insurance companies track my location and base my rates on where I drive.
Almost half of survey respondents -- 48 percent -- thought insurers typically monitor where customers drive.
But the PAYD devices give customers to plug into their cars generally don't monitor location, and today's programs don't base rates on where you drive.
State Farm says its Drive Safe & Save In-Drive device, for instance, only provides exact vehicle location information for safety and security reasons, such as for roadside assistance or locating a stolen vehicle.
Otherwise the company doesn't monitor your precise whereabouts.
"State Farm respects your privacy," the company says on its website. "We only receive information about the broad geographic areas in which your vehicle is driven. The size of these areas is approximately 40 square miles."
But that doesn't mean insurers have ruled out using location in the future.
Progressive said this year it planned to test GPS-enabled devices to see how highway versus street driving might predict losses. The company, which says it has collected more than 10 billion miles of driving data on more than 2 million vehicles since January 2008, is considered the leader in usage-based insurance in the U.S.
Myth 3: You get your full discount right away.
Forty-three percent of survey respondents said almost all pay-as-you-drive programs provide discounts immediately. In reality, the programs vary in how they apply the discount, but typically you don't get the discount until renewal time.
Some programs, however, do offer a small initial discount for signing up. With Intellidrive by Travelers Insurance, you can get up to a 10 percent discount for signing up and then up to a 30 percent discount at renewal time for low mileage.
Progressive lets you sign up for a 30-day trial of Snapshot. After logging 30 days of driving information, you can find out how much you might save and can apply the discount to your premium. In another five months, the ongoing discount is set for the policy renewal.
Myth 4:If the device shows I drive poorly, my rates will go up.
Of those unwilling to try pay-as-you-drive insurance, 12 percent said they thought the insurer might raise their rates, based on the data collected. Another 22 percent said they didn't think the discount would be worth it.
Typically, PAYD programs won't raise your rates if your driving isn't up to par.
"Rest assured, your rate will never increase based on your participation in the DriveSense program," Esurance says of its usage-based product.
However, State Farm says premiums could increase for customers in rare cases. That would happen only if you currently get a discount from State Farm for driving under 7,500 miles a year and then you enroll in the company's Drive Safe & Save program and log more than 7,500 miles annually.
Most customers who enroll in the program, though, will save money, the company says.
Recently, though, Progressive, which had said rates would never go up for bad drives enrolled in its Snapshot program, made headlines by announcing it plans to change that approach over time.
"In our latest model, introduced in one state in December of 2014, we are taking the significant step by affording more customers discounts for their good driving behavior, while offsetting with surcharges for a small segment of drivers whose driving behavior is clearly indicative of such rates," the company said in its 2014 annual report.
What does that mean for you? In states where the company uses the new approach, your premiums could up after you enroll in Snapshot if the data shows you're a highly risky driver. If the data shows you pose very little risk, than you could get a bigger discount than you would have with the old approach. For now the change is effective only in Missouri and affects only new participants, a Progressive spokes person told the Chicago Tribune.
The company said it is also offering higher enrollment discounts to preferred drivers who sign up for Snapshot than for higher-risk drivers who sign up.
"We are excited by the competitive and growth potential we foresee," the company said about the Snapshot program.
Myth 5: Car insurance companies will share the information.
Among survey respondents who said they wouldn't consider trying a pay-as-you-drive plan, 13 percent said they think the insurer would share their personal data.
Privacy concerns are among the biggest obstacles for consumers to accept pay-as-you-drive programs.
Insurers say they won't share the information unless they are legally obligated. Otherwise the only people who see the data are you and the insurance company.
"Travelers may become legally obligated to provide data to law enforcement investigating the cause of an accident, in response to a subpoena, or as otherwise required by law," Travelers Insurance says of its Intellidrive program. "If we are required to provide data to a third-party, we may use the data for claim purposes."