Distance Risk Factor

Auto Insurance

Car Insurance Distance Risk Factor

Flat rate

Several car insurance plans charge a flat rate regardless of how much the car is used.

Reasonable estimation

Several car insurance plans relies on a reasonable estimation of the average annual distance expected to be driven which is provided by the insured. This benefits drivers who drive their cars infrequently.

Odometer-based systems

Cents Per Mile Now advocates a car insurance pricing scheme based on odometer readings. The policyholder would purchase insurance to cover a certain number of miles driven. The beginning and ending odometer readings would then be printed on the insurance card, so that in the event of a traffic stop, an officer could easily verify that the insurance is current.

Critics point out the possibility of cheating the system by odometer tampering. Although the newer electronic odometers are difficult to roll back, they can still be defeated by disconnecting the odometer wires and reconnecting them later.

GPS-based system

In 1998, Progressive Insurance started a pilot program in Texas in which volunteers installed a GPS-based technology called Autograph in exchange for a discount. The device tracked their driving behavior and reported the results via cellular phone to the company. Policyholders were reportedly more upset about having to pay for the expensive device than they were over privacy concerns.

OBDII-based system

In 2004, the company launched another pilot program to allow policyholders to earn a discount on their premiums by consenting to use its TripSense device. TripSense connects to a car's OnBoard Diagnostic(OBDII) port, which exists in all cars built after 1996. The discount is forfeited if the device is disconnected for a significant amount of time.

According to Progressive, the TripSense device records:

Start time
End time
Miles driven
Duration
Number of aggressive braking events
Number of aggressive acceleration events
Speed at 10-second intervals
Time and date of each connection/disconnection to the OBDII port.

Already got those 2 quotes? Get more auto insurance quotes!

This article has been derived fully or in part from Wikipedia, the free encyclopedia, and may have been extended by the Car & Auto Insurance Staff! The article is available under the terms of the GNU Free Documentation License (GFDL).
Rest: Copyright © 2005-2006 car-auto-insurance.org