Can inviting your insurance company along for the ride by using a driving monitor really save you money on car insurance?

Written by Ryan Lowell on February 23, 2011 & Posted in Insurance

Dear Ryan,

I have heard ads about driving monitors from an insurance company that can reduce car insurance bills. How do driving monitors work, and can they really save me money?

Janet W. Topeka, KS

Dear Janet,

There are different types of vehicle monitoring systems available, and for different purposes.

If you have teen drivers, you may want a system that includes both an in-car camera and a GPS-enabled data logger. That way, you know when, where, and how quickly your teen has been driving, along with a video of what is happening in your car. Are they texting, talking with friends, or are they paying attention to the road?

There are GPS-enabled devices that do everything but keep a video log. You can get speed alerts, set up "geo-fences" that alert you when the car crosses a pre-set boundary, andbreadcrumb trails depicting everywhere the car has been.

The system that you hear advertised by car insurance companies is different from these. It plugs into your car's diagnostic port, and monitors the time you drive, the distance you drive, how fast you go and how smoothly you brake. There is no GPS technology included, so it can't determine where you have been or whether you exceeded a posted speed limit

In order to earn a discount, you must drive slowly, brake smoothly, drive fewer miles than the average driver in your state, and not drive during times of heavy road use, like rush hour. You must not drive in the high-risk time period of Midnight to 4:00AM. It does log the day and time it is removed, so you can't fool it by unplugging it before engaging in risky behavior.

You may earn a discount and cheap car insurance if you meet these criteria, but in some states you may earn an increase in your premiums of up to nine percent if your monitored behavior indicates high risk. You can cancel the program at any time, but the data collected may be used to determine your rates at renewal.

Could a driving monitor help you obtain the cheapest car insurance? That depends on your driving habits. I suggest you review the criteria that could earn you a discount and compare that to your actual driving habits.

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