How Tracking Rewards Good Drivers

A tracking device on your car reveals how you drive. Good drivers are rewarded with policy discounts.

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My insurer offers a data-tracking program that gives a discount based on my driving habits. Is it worthwhile to sign up?

Answer: If you tend to keep your annual mileage low and have safe driving habits, enrolling in a data-tracking program can be a good deal. Several insurers offer these programs, including Allstate, Progressive and State Farm. With State Farm’s Drive Safe & Save, drivers who log the fewest miles and have the best driving habits can save up to 50% on premiums, though the average discount runs 10% to 15%, says State Farm’s Scott Bruns. The programs are voluntary, and specifics vary by insurer and state. You may also get a discount just for signing up. Progressive offers an average discount of $25 if you sign up for its Snapshot program.

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To relay information to your insurer, you use an app on your smartphone or plug a device into your car that tracks how many miles you drive and how often you drive late at night, as well as such potentially dangerous driving habits as braking hard and accelerating rapidly. You can review your results online so that you can work on improving your habits before your rate is set each term.

The Allstate and State Farm programs do not currently penalize you for risky driving habits. But Progressive has raised premiums on about two out of 10 tracked drivers who display risky behavior behind the wheel.

Kimberly Lankford
Contributing Editor, Kiplinger's Personal Finance

As the "Ask Kim" columnist for Kiplinger's Personal Finance, Lankford receives hundreds of personal finance questions from readers every month. She is the author of Rescue Your Financial Life (McGraw-Hill, 2003), The Insurance Maze: How You Can Save Money on Insurance -- and Still Get the Coverage You Need (Kaplan, 2006), Kiplinger's Ask Kim for Money Smart Solutions (Kaplan, 2007) and The Kiplinger/BBB Personal Finance Guide for Military Families. She is frequently featured as a financial expert on television and radio, including NBC's Today Show, CNN, CNBC and National Public Radio.