Progressive Insurance is introducing an optional car insurance program that offers lower rates on vehicles driven in less risky ways. The behavior-based insurance program, called MyRate, gives drivers a customized rate based on how, how much, and when their car is driven.
"MyRate is designed primarily for lower-risk drivers who are consistent and safe," says Richard Hutchinson, Progressive's MyRate general manager. "They drive at low-risk times of day, and they keep alert for others on the road. They don't make fast lane changes or follow too closely behind other drivers, so they don't have to overreact or slam on the brakes."
Drivers who choose to sign up for MyRate receive a small wireless device that plugs into a port in their car. The device allows Progressive to see how, how much, and when the car is being driven. Cars driven less often, in less risky ways, and at less risky times of day can receive a lower premium.
Drivers with more than one car can select which, if any, of their vehicles to enroll in MyRate. For example, a person with a second car that isn't driven very often may enroll that car in MyRate but may decline to enroll the first vehicle if it is driven more frequently or during higher-risk times of day.
New customers can earn a first-term discount of up to 10 percent just for signing up. Then, depending on the program features in their particular state, their rate may go up or down at renewal, based on their driving habits. The impact on the rate could be anywhere from a 60 percent discount to a nine percent surcharge. In some states, there also will be a technology expense for the cost of the device and data transmission.
"Because MyRate could lead to a higher rate for drivers in some states, we want people to know the program is not right for everyone," Hutchinson says. "The good news is customers who have signed up for MyRate can review their driving data in a secure part of progressive.com, see how their habits are affecting their rate, and if they choose, make behavioral changes that can lead to real savings."
Progressive began offering MyRate starting with Alabama in late June. A national rollout of the program will continue, pending regulatory approval, throughout 2008 and 2009. It will be available to customers who buy their policies directly or through independent insurance agents.
Progressive's initial foray into usage-based insurance started in 1999 with a program in Texas called Autograph. Its next generation of usage-based insurance, TripSense, became available in Minnesota, Michigan, and Oregon beginning in 2004. The states with TripSense eventually will be converted to the MyRate program.
Progressive has received patents on its methods and systems of implementing usage-based insurance and has licensed these methods and systems to other companies.
