Progressive: You Speed, You Pay!

For a long time now many car insurance companies have offered special rates for “good drivers,” which specifically meant different things to different companies, but generally meant that you hadn’t had an accident. But with increased levels of technology, insurance companies have gone beyond your accident record and created voluntary driver-monitoring programs – commonly called telematics or usage-based insurance surveillance – that allows companies to record how well you drive, like the Progressive’s Snapshot program.

Via a small box plugged into your steering wheel, it records information and sends it back to the company. Things like how many miles you drive, how many miles you drive between midnight and 4 AM, and whether you drive using sharp or gentle braking. Then that data is used to analyze your driving patterns and the risk you pose to the insurance company, and you can save money on your premiums. Neat, huh?

In the past this kind of voluntary surveillance has been positioned as something that was there to reward “good drivers.” And, as one of the cardinal rules of advertising is “Thou shalt not call attention to the negative side of offers,” nothing has ever said about penalizing bad driving using that same data. Until now.

Progressive is going to levy a surcharge on drivers they deem “bad” or aggressive via their Snapshot device. In Progressive’s annual report, the company shared these plans: "In recent years, we have employed a 'discount only' model for usage-based rating. In our latest model, introduced in one state in December 2014, we are affording more customers discounts for their good driving behavior, while offsetting with surcharges for a small segment of drivers." Uh oh!

This change will result in "some customers who drive more aggressively (receiving) a surcharge (estimated to be no more than 10% of the rate they currently pay) at renewal." Customers can opt out of the program without any detriment. Kind of like wiping the hard drive clean, although those who sign up will get a discount immediately without having to wait till their driving is assessed.

According to our 2015 Customer Loyalty Engagement Index, when it comes to car insurance and how well companies fulfill consumer expectations regarding “safe driving premium discounts, here are how brands rank:

1. Progressive
2. Geico
3. USAA
4. Allstate / State Farm
5. Esurance
6. Nationwide
7. Liberty Mutual

As previously noted, most insurance companies offer up some option for a safe driver premium discount. For example:

• Geico suggests that a defensive driving course is a great way to become a better driver and save money on your car insurance premium.

• USAA defines a “safe driver” as one who maintains a good driving record for more than five years.

• State Farm has their Drive Safe & Save discount program, which uses basic information from your vehicle's OnStar or In-Drive devices to calculate your discount.

• Esurance program specifics vary from state-to-state, but the most common qualifications are 5 years without an at-fault accident claim or DUI/DWI conviction at least one person on the policy has 5+ years of driving experience.

• Nationwide rewards customers who are free of at-fault accidents and free of major violations for at least 5 years.

• Liberty Mutual offers a safe driver discount to drivers with no moving violations or accidents.

• Allstate has a Drivewise program, and according to the company doesn't plan to add a “bad driver” surcharge to its program for the foreseeable future, so it will be interesting to see if this use-recalibration of the Progressive telematics program will affect customer perceptions.

The bottom line of course is that no matter whether your car is wired for telematics or not you really should drive as safely as possible. Interestingly, it turns out that the best car device to guarantee safe driving is a rear-view mirror with a police car in it.