Usage-based insurance
Encyclopedia
Usage based insurance, also known as pay as you drive (PAYD) and mile-based auto insurance is a type of automobile insurance whereby the costs of motor insurance are dependent upon type of vehicle used, measured against Time, Distance and Place.
This differs from traditional insurance, which attempts to differentiate and reward "safe" drivers, giving them lower premiums and/or a no-claims bonus. However, conventional differentiation is a reflection of past history rather than present patterns of behaviour. This means that it may take a long time before safer (or more reckless) patterns of driving and changes in lifestyle feed through into premiums.
Pay as you drive (PAYD) means that the insurance premium is calculated dynamically, typically according to the amount you drive. There are three types of usage based insurance:
The formula can be a simple function of the number of miles you drive, or can vary according to the type of driving or the identity of the driver. Once the basic scheme is in place, it is possible to add further details, such as an extra risk premium if someone drives too long without a break, uses their mobile phone while driving, or travels at an excessive speed.
Telematic
usage based insurance (i.e. the latter two types, in which vehicle information is automatically transmitted to the system) provides a much more immediate feedback loop to the driver, by changing the cost of insurance dynamically with a change of risk, and this means drivers have a stronger incentive to adopt safer practices. For example if a commuter switches to public transport or working at home, this immediately reduces the risk of rush-hour accidents. With usage based insurance, this reduction would be immediately reflected in the cost of car insurance for that month.
in Canada, OUTsurance and MiWay in South Africa.
Norwich Union has now discontinued their PAYD product in the UK, and announced that existing users will have their contracts terminated. The reason given to customers was lack of demand for the service, and disappointing uptake.
Policyholders can also earn Reward and Bonus Miles. Good driving earns Bonus Miles on a monthly basis. Reward Miles are earned by buying online through insurethebox's Shopping Box, as the company has partnered with a number of leading high street retailers.
in the United States. It is a voluntary, behavior-based insurance program that gives drivers a customized insurance rate based on how, how much, and when their car is driven. Snapshot is currently available in 39 states including: Alabama
, Arizona
, Arkansas
, Colorado
, Connecticut
, District of Columbia, Florida
, Georgia
, Idaho
, Iowa
, Kansas
, Kentucky
, Louisiana
, Maine
, Maryland
, Michigan
, Mississippi
, Montana
, Minnesota
, Missouri
, Nebraska
, Nevada
, New Hampshire
, New Jersey
, New Mexico
, New York
, North Dakota
, Ohio
, Oklahoma
, Oregon
, Pennsylvania
, Rhode Island
, South Carolina
, South Dakota
, Texas
, Utah
, Vermont
, Virginia
, Wisconsin
and Wyoming
.
Driving data is transmitted to the company using an on-board telematic device. The device connects to a car's OnBoard Diagnostic (OBD-II) port (all automobiles built after 1996 have an OBD-II.) and transmits speed, time of day and number of miles the car is driven. There is no GPS in the Snapshot device, so no location information is collected. Cars that are driven less often, in less risky ways and at less risky times of day can receive large discounts. Progressive has received patents on its methods and systems of implementing usage-based insurance and has licensed these methods and systems to other companies. Progressive has service marks pending on the terms Pay As You Drive and Pay How You Drive.
The program bundles several solutions for increased value add to customers: Performance Advisor (insurance and safety monitoring part) is provided by Sensomatix, Mobile Advisor (fleet monitoring part) is provided by General Electric, and Fuel Advisor (fuel card application) is provided by Voyager/US Bank.
terminals.
Web Services Startup Challenge. MileMeter is currently only licensed to provide insurance in the state of Texas.
is one of the first and largest auto insurance companies to institute a Pay-As-You-Drive (PAYD) program in the United States back in 2004. The GMAC Insurance Low-Mileage Discount is an innovative program offered to OnStar subscribers in 34 states, where those who drive less pay less on their auto insurance.
This opt-in program is the first of its kind leveraging state-of-the-art technology using OnStar to allow customers who drive fewer miles to benefit from substantial savings. Eligible active OnStar subscribers sign up to save on their premiums if they drive less than 15,000 miles annually. Subscribers who drive even less than that can save even more (up to 54%).
Under the program, new GMAC Insurance customers receive an automatic insurance discount of approximately 26 percent upon enrollment (existing OnStar customers receive a discount based on historical mileage).
With the subscriber’s permission, the odometer reading from his or her monthly OnStar Vehicle Diagnostics report is forwarded to GMAC Insurance. Based on those readings, the company will decrease the premium using discount tiers corresponding to miles driven.
Information sent from OnStar to GMAC Insurance pertains solely to mileage, and no additional data is gathered or used for any purpose other than to help manage transportation costs. Customers who drive more than 15,000 miles per year are not penalized and all OnStar customers receive an insurance discount simply for having an active OnStar subscription.
The company plans to include additional states in the future.
There are several issued patent
s and pending patent application
s that have been filed worldwide on various inventions related to telematic auto insurance. These include:
"Individual evaluation system for motorcar risk" "Motor vehicle monitoring system for determining a cost of insurance" Progressive auto insurance "Vehicular Insurance Bill Calculating System, On-Vehicle Device, and Server Device", Toyota "Insurance Fee Calculation Device, Insurance Fee Calculation Program, Insurance Fee Calculation Method, and Insurance Fee Calculation System", AIOI Insurance Company.
In order to make sure that patents did not hinder its Pay as You Drive development program, Norwich Union purchased the UK version of EP0700009 and obtained an exclusive license to any EU patents that may emerge from Progressive's EU patent applications.
In June of 2010, Progressive Auto Insurance filed a patent infringement lawsuit against Liberty Mutual
over one of Progressive’s Pay As You Drive auto insurance patents.
In September of 2010 Progressive Auto Insurance filed a declaratory judgment
lawsuit against Hughes Telematics to have several its patents covering OBDII mounted wireless data loggers declared invalid. Progressive uses these devices from a competitive supplier, Xirgo Technologies.
has been proposed. A US patent application combining this technology with a usage based insurance product was open for public comment on peer to patent
.
This differs from traditional insurance, which attempts to differentiate and reward "safe" drivers, giving them lower premiums and/or a no-claims bonus. However, conventional differentiation is a reflection of past history rather than present patterns of behaviour. This means that it may take a long time before safer (or more reckless) patterns of driving and changes in lifestyle feed through into premiums.
Economic and environmental impact
In economic terms, usage based insurance can be regarded as a form of context-aware service. Usage based insurance has been strongly promoted by environmental and transport groups, mostly as a way of encouraging people to use their cars less.Concept
The simplest form of usage based insurance bases the insurance costs simply on the number of miles driven. However, the general concept of Pay As You Drive includes any scheme where the insurance costs may depend not just on how much you drive but how, where and when you drive.Pay as you drive (PAYD) means that the insurance premium is calculated dynamically, typically according to the amount you drive. There are three types of usage based insurance:
- Coverage is based on the odometerOdometerAn odometer or odograph is an instrument that indicates distance traveled by a vehicle, such as a bicycle or automobile. The device may be electronic, mechanical, or a combination of the two. The word derives from the Greek words hodós and métron...
reading of the vehicle. - Coverage is based on the number of minutes the vehicle is being used as recorded by a vehicle-independent module transmitting data via cellphoneMobile phoneA mobile phone is a device which can make and receive telephone calls over a radio link whilst moving around a wide geographic area. It does so by connecting to a cellular network provided by a mobile network operator...
or RFRF connectorA coaxial RF connector is an electrical connector designed to work at radio frequencies in the multi-megahertz range.RF connectors are typically used with coaxial cables and are designed to maintain the shielding that the coaxial design offers. Better models also minimize the change in transmission...
technology. - Coverage is based on other data collected from the vehicle, including speed and time-of-day information in addition to distance or time travelled.
The formula can be a simple function of the number of miles you drive, or can vary according to the type of driving or the identity of the driver. Once the basic scheme is in place, it is possible to add further details, such as an extra risk premium if someone drives too long without a break, uses their mobile phone while driving, or travels at an excessive speed.
Telematic
Telematics
Telematics typically is any integrated use of telecommunications and informatics, also known as ICT...
usage based insurance (i.e. the latter two types, in which vehicle information is automatically transmitted to the system) provides a much more immediate feedback loop to the driver, by changing the cost of insurance dynamically with a change of risk, and this means drivers have a stronger incentive to adopt safer practices. For example if a commuter switches to public transport or working at home, this immediately reduces the risk of rush-hour accidents. With usage based insurance, this reduction would be immediately reflected in the cost of car insurance for that month.
Potential benefits
- Social and environmental benefits from more responsible and less unnecessary driving.
- Commercial benefits to the insurance company from better alignment of insurance with actual risk. Improved customer segmentation.
- Potential cost-savings for responsible customers.
- More choice for consumers on type of car insurance available to buy.
- Social benefits from accessibility to affordable insurance for young drivers - rather than paying for irresponsible peers, with this type of insurance young drivers pay for how they drive.
- Higher-risk drivers pay most per use, thus have highest incentive to change driving patterns or get off the roads, leaving roads more safe.
- For telematic usage based insurance: Continuous tracking of vehicle location enhances both personal security and vehicle security. The GPSGlobal Positioning SystemThe Global Positioning System is a space-based global navigation satellite system that provides location and time information in all weather, anywhere on or near the Earth, where there is an unobstructed line of sight to four or more GPS satellites...
technology could be used to trace the vehicle whereabouts following an accident, breakdown or theft. - The same GPS technology can often be used to provide other (non insurance) benefits to consumers, e.g. satellite navigation.
Potential drawbacks
- Prepaid insurance (usage based or not) charges for future rather than past risk, and inevitably predicts some drivers' risk imprecisely. For example, a distance-based system may not distinguish between highway, city street, or rural back road driving. (Premiums can vary by zone to minimise this effect.) A telematic system may charge a driver who speeds, but otherwise drives in a safe manner, more than a slower driver who changes lanes abruptly, or drives in an inattentive or careless manner.
- Some systems (but not all) use continuous GPS tracking of vehicles, which may constitute an unacceptable infringement on customers' privacyPrivacyPrivacy is the ability of an individual or group to seclude themselves or information about themselves and thereby reveal themselves selectively...
.
Commercial products
Insurance companies offering various forms of usage based insurance either as fully commercial products or at least on a trial basis include Progressive, Liberty Mutual, MileMeter http://milemeter.com/ and GMAC in the United States, Pay As You Drive car insurance from Real Insurance in Australia, insurethebox, i-kube, Coverbox in the United Kingdom, Hollard Insurance in South Africa, AIOI Insurance Company in Japan, AvivaAviva
Aviva plc is a global insurance company headquartered in London, United Kingdom. It is the sixth-largest insurance company in the world measured by net premium income and has 53 million customers in 28 countries...
in Canada, OUTsurance and MiWay in South Africa.
Norwich Union has now discontinued their PAYD product in the UK, and announced that existing users will have their contracts terminated. The reason given to customers was lack of demand for the service, and disappointing uptake.
insurethebox
Insurethebox started selling UK policies in 2010. Insurethebox fit a telematics device, known as a Clear Box (slightly bigger than a mobile phone), to the car. The Clear Box enables the company to measure how well and how far the car is driven. Younger drivers who drive well and lower than average mileage drivers can expect significant savings to their car insurance. The lower the mileage, the cheaper the car insurance - so initially the policyholder buys 6,000 miles of cover and the Clear Box monitors exactly how many miles have been driven. Should additional miles be needed, the policyholder buys top-ups. Top-Up Miles can be bought in bundles of 250, 500, or 1,000 miles and surplus miles can be rolled over to the next policy year.Policyholders can also earn Reward and Bonus Miles. Good driving earns Bonus Miles on a monthly basis. Reward Miles are earned by buying online through insurethebox's Shopping Box, as the company has partnered with a number of leading high street retailers.
Progressive Insurance
Snapshot is a car insurance program developed by Progressive InsuranceProgressive Corporation
The Progressive Corporation , known as the Progressive Casualty Insurance Company through its subsidiaries, provides personal automobile insurance, and other specialty property-casualty insurance and related services in the United States....
in the United States. It is a voluntary, behavior-based insurance program that gives drivers a customized insurance rate based on how, how much, and when their car is driven. Snapshot is currently available in 39 states including: Alabama
Alabama
Alabama is a state located in the southeastern region of the United States. It is bordered by Tennessee to the north, Georgia to the east, Florida and the Gulf of Mexico to the south, and Mississippi to the west. Alabama ranks 30th in total land area and ranks second in the size of its inland...
, Arizona
Arizona
Arizona ; is a state located in the southwestern region of the United States. It is also part of the western United States and the mountain west. The capital and largest city is Phoenix...
, Arkansas
Arkansas
Arkansas is a state located in the southern region of the United States. Its name is an Algonquian name of the Quapaw Indians. Arkansas shares borders with six states , and its eastern border is largely defined by the Mississippi River...
, Colorado
Colorado
Colorado is a U.S. state that encompasses much of the Rocky Mountains as well as the northeastern portion of the Colorado Plateau and the western edge of the Great Plains...
, Connecticut
Connecticut
Connecticut is a state in the New England region of the northeastern United States. It is bordered by Rhode Island to the east, Massachusetts to the north, and the state of New York to the west and the south .Connecticut is named for the Connecticut River, the major U.S. river that approximately...
, District of Columbia, Florida
Florida
Florida is a state in the southeastern United States, located on the nation's Atlantic and Gulf coasts. It is bordered to the west by the Gulf of Mexico, to the north by Alabama and Georgia and to the east by the Atlantic Ocean. With a population of 18,801,310 as measured by the 2010 census, it...
, Georgia
Georgia (U.S. state)
Georgia is a state located in the southeastern United States. It was established in 1732, the last of the original Thirteen Colonies. The state is named after King George II of Great Britain. Georgia was the fourth state to ratify the United States Constitution, on January 2, 1788...
, Idaho
Idaho
Idaho is a state in the Rocky Mountain area of the United States. The state's largest city and capital is Boise. Residents are called "Idahoans". Idaho was admitted to the Union on July 3, 1890, as the 43rd state....
, Iowa
Iowa
Iowa is a state located in the Midwestern United States, an area often referred to as the "American Heartland". It derives its name from the Ioway people, one of the many American Indian tribes that occupied the state at the time of European exploration. Iowa was a part of the French colony of New...
, Kansas
Kansas
Kansas is a US state located in the Midwestern United States. It is named after the Kansas River which flows through it, which in turn was named after the Kansa Native American tribe, which inhabited the area. The tribe's name is often said to mean "people of the wind" or "people of the south...
, Kentucky
Kentucky
The Commonwealth of Kentucky is a state located in the East Central United States of America. As classified by the United States Census Bureau, Kentucky is a Southern state, more specifically in the East South Central region. Kentucky is one of four U.S. states constituted as a commonwealth...
, Louisiana
Louisiana
Louisiana is a state located in the southern region of the United States of America. Its capital is Baton Rouge and largest city is New Orleans. Louisiana is the only state in the U.S. with political subdivisions termed parishes, which are local governments equivalent to counties...
, Maine
Maine
Maine is a state in the New England region of the northeastern United States, bordered by the Atlantic Ocean to the east and south, New Hampshire to the west, and the Canadian provinces of Quebec to the northwest and New Brunswick to the northeast. Maine is both the northernmost and easternmost...
, Maryland
Maryland
Maryland is a U.S. state located in the Mid Atlantic region of the United States, bordering Virginia, West Virginia, and the District of Columbia to its south and west; Pennsylvania to its north; and Delaware to its east...
, Michigan
Michigan
Michigan is a U.S. state located in the Great Lakes Region of the United States of America. The name Michigan is the French form of the Ojibwa word mishigamaa, meaning "large water" or "large lake"....
, Mississippi
Mississippi
Mississippi is a U.S. state located in the Southern United States. Jackson is the state capital and largest city. The name of the state derives from the Mississippi River, which flows along its western boundary, whose name comes from the Ojibwe word misi-ziibi...
, Montana
Montana
Montana is a state in the Western United States. The western third of Montana contains numerous mountain ranges. Smaller, "island ranges" are found in the central third of the state, for a total of 77 named ranges of the Rocky Mountains. This geographical fact is reflected in the state's name,...
, Minnesota
Minnesota
Minnesota is a U.S. state located in the Midwestern United States. The twelfth largest state of the U.S., it is the twenty-first most populous, with 5.3 million residents. Minnesota was carved out of the eastern half of the Minnesota Territory and admitted to the Union as the thirty-second state...
, Missouri
Missouri
Missouri is a US state located in the Midwestern United States, bordered by Iowa, Illinois, Kentucky, Tennessee, Arkansas, Oklahoma, Kansas and Nebraska. With a 2010 population of 5,988,927, Missouri is the 18th most populous state in the nation and the fifth most populous in the Midwest. It...
, Nebraska
Nebraska
Nebraska is a state on the Great Plains of the Midwestern United States. The state's capital is Lincoln and its largest city is Omaha, on the Missouri River....
, Nevada
Nevada
Nevada is a state in the western, mountain west, and southwestern regions of the United States. With an area of and a population of about 2.7 million, it is the 7th-largest and 35th-most populous state. Over two-thirds of Nevada's people live in the Las Vegas metropolitan area, which contains its...
, New Hampshire
New Hampshire
New Hampshire is a state in the New England region of the northeastern United States of America. The state was named after the southern English county of Hampshire. It is bordered by Massachusetts to the south, Vermont to the west, Maine and the Atlantic Ocean to the east, and the Canadian...
, New Jersey
New Jersey
New Jersey is a state in the Northeastern and Middle Atlantic regions of the United States. , its population was 8,791,894. It is bordered on the north and east by the state of New York, on the southeast and south by the Atlantic Ocean, on the west by Pennsylvania and on the southwest by Delaware...
, New Mexico
New Mexico
New Mexico is a state located in the southwest and western regions of the United States. New Mexico is also usually considered one of the Mountain States. With a population density of 16 per square mile, New Mexico is the sixth-most sparsely inhabited U.S...
, New York
New York
New York is a state in the Northeastern region of the United States. It is the nation's third most populous state. New York is bordered by New Jersey and Pennsylvania to the south, and by Connecticut, Massachusetts and Vermont to the east...
, North Dakota
North Dakota
North Dakota is a state located in the Midwestern region of the United States of America, along the Canadian border. The state is bordered by Canada to the north, Minnesota to the east, South Dakota to the south and Montana to the west. North Dakota is the 19th-largest state by area in the U.S....
, Ohio
Ohio
Ohio is a Midwestern state in the United States. The 34th largest state by area in the U.S.,it is the 7th‑most populous with over 11.5 million residents, containing several major American cities and seven metropolitan areas with populations of 500,000 or more.The state's capital is Columbus...
, Oklahoma
Oklahoma
Oklahoma is a state located in the South Central region of the United States of America. With an estimated 3,751,351 residents as of the 2010 census and a land area of 68,667 square miles , Oklahoma is the 28th most populous and 20th-largest state...
, Oregon
Oregon
Oregon is a state in the Pacific Northwest region of the United States. It is located on the Pacific coast, with Washington to the north, California to the south, Nevada on the southeast and Idaho to the east. The Columbia and Snake rivers delineate much of Oregon's northern and eastern...
, Pennsylvania
Pennsylvania
The Commonwealth of Pennsylvania is a U.S. state that is located in the Northeastern and Mid-Atlantic regions of the United States. The state borders Delaware and Maryland to the south, West Virginia to the southwest, Ohio to the west, New York and Ontario, Canada, to the north, and New Jersey to...
, Rhode Island
Rhode Island
The state of Rhode Island and Providence Plantations, more commonly referred to as Rhode Island , is a state in the New England region of the United States. It is the smallest U.S. state by area...
, South Carolina
South Carolina
South Carolina is a state in the Deep South of the United States that borders Georgia to the south, North Carolina to the north, and the Atlantic Ocean to the east. Originally part of the Province of Carolina, the Province of South Carolina was one of the 13 colonies that declared independence...
, South Dakota
South Dakota
South Dakota is a state located in the Midwestern region of the United States. It is named after the Lakota and Dakota Sioux American Indian tribes. Once a part of Dakota Territory, South Dakota became a state on November 2, 1889. The state has an area of and an estimated population of just over...
, Texas
Texas
Texas is the second largest U.S. state by both area and population, and the largest state by area in the contiguous United States.The name, based on the Caddo word "Tejas" meaning "friends" or "allies", was applied by the Spanish to the Caddo themselves and to the region of their settlement in...
, Utah
Utah
Utah is a state in the Western United States. It was the 45th state to join the Union, on January 4, 1896. Approximately 80% of Utah's 2,763,885 people live along the Wasatch Front, centering on Salt Lake City. This leaves vast expanses of the state nearly uninhabited, making the population the...
, Vermont
Vermont
Vermont is a state in the New England region of the northeastern United States of America. The state ranks 43rd in land area, , and 45th in total area. Its population according to the 2010 census, 630,337, is the second smallest in the country, larger only than Wyoming. It is the only New England...
, Virginia
Virginia
The Commonwealth of Virginia , is a U.S. state on the Atlantic Coast of the Southern United States. Virginia is nicknamed the "Old Dominion" and sometimes the "Mother of Presidents" after the eight U.S. presidents born there...
, Wisconsin
Wisconsin
Wisconsin is a U.S. state located in the north-central United States and is part of the Midwest. It is bordered by Minnesota to the west, Iowa to the southwest, Illinois to the south, Lake Michigan to the east, Michigan to the northeast, and Lake Superior to the north. Wisconsin's capital is...
and Wyoming
Wyoming
Wyoming is a state in the mountain region of the Western United States. The western two thirds of the state is covered mostly with the mountain ranges and rangelands in the foothills of the Eastern Rocky Mountains, while the eastern third of the state is high elevation prairie known as the High...
.
Driving data is transmitted to the company using an on-board telematic device. The device connects to a car's OnBoard Diagnostic (OBD-II) port (all automobiles built after 1996 have an OBD-II.) and transmits speed, time of day and number of miles the car is driven. There is no GPS in the Snapshot device, so no location information is collected. Cars that are driven less often, in less risky ways and at less risky times of day can receive large discounts. Progressive has received patents on its methods and systems of implementing usage-based insurance and has licensed these methods and systems to other companies. Progressive has service marks pending on the terms Pay As You Drive and Pay How You Drive.
Liberty Mutual Insurance
Onboard Advisor is a commercial lines usage based insurance product by Liberty Mutual. It offers up to 40% discount to commercial and private fleets based on how safe they actually drive. It also offers a set of tools for assisting fleet owners to improve safety as well as reduce fuel consumption and other operational expenses.The program bundles several solutions for increased value add to customers: Performance Advisor (insurance and safety monitoring part) is provided by Sensomatix, Mobile Advisor (fleet monitoring part) is provided by General Electric, and Fuel Advisor (fuel card application) is provided by Voyager/US Bank.
Real Insurance
Pay As You Drive is a product developed in Australia by Real Insurance and Exigen Insurance. It solves a number of the problems that Norwich Union and other telematic solutions face, including privacy issues and variable premiums. Customers pay a minimum premium, and then pre-pay for kilometers.AIOI
AIOI introduced a Pay as You Drive insurance product in Japan in 2005. They partnered with Toyota to develop the technology. The technology is based on Toyota's G-BookG-Book
G-Book is a telematics subscription service currently provided by Toyota Motor Corporation in Japan for its Toyota- and Lexus-branded vehicles. G-Book allows users to link with cellphones , personal digital assistants 's, personal computers and G-Book equipped cars across Japan...
terminals.
MileMeter
MileMeter is an insurance company that offers pay-by-the-mile auto insurance. They were selected as a finalist in the 2007 Amazon.comAmazon.com
Amazon.com, Inc. is a multinational electronic commerce company headquartered in Seattle, Washington, United States. It is the world's largest online retailer. Amazon has separate websites for the following countries: United States, Canada, United Kingdom, Germany, France, Italy, Spain, Japan, and...
Web Services Startup Challenge. MileMeter is currently only licensed to provide insurance in the state of Texas.
IRIS
The International Research and Intelligent Systems Global (IRIS) company's Pay As You Drive and Fleet Risk Management products won Strategic Risk magazine's "European Risk Management Product of the Year 2008". These products are currently under evaluation by two major insurance companies. IRIS is located in Coventry, United Kingdom.GMAC Insurance
GMAC InsuranceGMAC Insurance
Founded in 1939 as Motors Insurance Corporation, the GMAC Insurance Group is a property and casualty insurance company in the United States and is subsidiary of Ally Financial...
is one of the first and largest auto insurance companies to institute a Pay-As-You-Drive (PAYD) program in the United States back in 2004. The GMAC Insurance Low-Mileage Discount is an innovative program offered to OnStar subscribers in 34 states, where those who drive less pay less on their auto insurance.
This opt-in program is the first of its kind leveraging state-of-the-art technology using OnStar to allow customers who drive fewer miles to benefit from substantial savings. Eligible active OnStar subscribers sign up to save on their premiums if they drive less than 15,000 miles annually. Subscribers who drive even less than that can save even more (up to 54%).
Under the program, new GMAC Insurance customers receive an automatic insurance discount of approximately 26 percent upon enrollment (existing OnStar customers receive a discount based on historical mileage).
With the subscriber’s permission, the odometer reading from his or her monthly OnStar Vehicle Diagnostics report is forwarded to GMAC Insurance. Based on those readings, the company will decrease the premium using discount tiers corresponding to miles driven.
Information sent from OnStar to GMAC Insurance pertains solely to mileage, and no additional data is gathered or used for any purpose other than to help manage transportation costs. Customers who drive more than 15,000 miles per year are not penalized and all OnStar customers receive an insurance discount simply for having an active OnStar subscription.
The company plans to include additional states in the future.
AZ LOGICA
AZ LOGICA has developed the PAY AS YOU DRIVE application for Latin America environments. The developing environment is taken in account to calculate the premium. The end device in hardware and the management software design are co-created with the customer (Main Insurance companies)above the AZ Telematic Platform, which serves as base to the final product. The result is a tailor made application which qualifies only the important characteristics for each company. It is being tested in Colombian and in Brazilian main insurance companies, and soon will be expanded to other Latin American countries.MiWay
MiDriveStyle is a product developed in South Africa by MiWay. The product calculates car insurance premiums based on the customers individual "Drive Style". Driving style is not only determined by how far and when the vehicle is driven but also where and how it is driven. Driving style includes acceleration, deceleration, speeding and swerving. A unique feature of the MiDriveStyle device is that it doubles up as a tracking device.Tests
A number of tests of telematic auto insurance are currently underway or recently completed. These tests are being conducted in many different countries. They include:- King County, Washington, United States: 5000 person trial by Unigard InsuranceGeneral Casualty InsuranceGeneral Casualty Insurance is a super-regional property and casualty insurance provider headquartered in Sun Prairie, Wisconsin as of 2006.Winterthur U.S...
with US$ 1.9 million in federal funding
Patents
Patent
A patent is a form of intellectual property. It consists of a set of exclusive rights granted by a sovereign state to an inventor or their assignee for a limited period of time in exchange for the public disclosure of an invention....
s and pending patent application
Patent application
A patent application is a request pending at a patent office for the grant of a patent for the invention described and claimed by that application. An application consists of a description of the invention , together with official forms and correspondence relating to the application...
s that have been filed worldwide on various inventions related to telematic auto insurance. These include:
"Individual evaluation system for motorcar risk" "Motor vehicle monitoring system for determining a cost of insurance" Progressive auto insurance "Vehicular Insurance Bill Calculating System, On-Vehicle Device, and Server Device", Toyota "Insurance Fee Calculation Device, Insurance Fee Calculation Program, Insurance Fee Calculation Method, and Insurance Fee Calculation System", AIOI Insurance Company.
In order to make sure that patents did not hinder its Pay as You Drive development program, Norwich Union purchased the UK version of EP0700009 and obtained an exclusive license to any EU patents that may emerge from Progressive's EU patent applications.
In June of 2010, Progressive Auto Insurance filed a patent infringement lawsuit against Liberty Mutual
Liberty Mutual
Liberty Mutual Group, more commonly known by the name of its primary line of business Liberty Mutual, is a diversified global insurer and the third largest property and casualty insurer in the United States based on 2010 net written premium. It is the 82nd company on the Fortune 500 list for 2011...
over one of Progressive’s Pay As You Drive auto insurance patents.
In September of 2010 Progressive Auto Insurance filed a declaratory judgment
Declaratory judgment
A declaratory judgment is a judgment of a court in a civil case which declares the rights, duties, or obligations of one or more parties in a dispute. A declaratory judgment is legally binding, but it does not order any action by a party. In this way, the declaratory judgment is like an action to...
lawsuit against Hughes Telematics to have several its patents covering OBDII mounted wireless data loggers declared invalid. Progressive uses these devices from a competitive supplier, Xirgo Technologies.
Trademarks
- "Pay as You Drive" is a trademark of Hollard in South Africa.
- "Pay as You Drive" is a trademark of Real InsuranceReal InsuranceReal Insurance is an Australian based general insurer. Real Insurance is a part of the Hollard Group, which has offices in the UK, USA, China, South Africa and India. The Hollard Group has more than 6.5 million policy holders worldwide....
in Australia. - "Pay as You Drive" is a trademark of Norwich UnionNorwich UnionNorwich Union was the name given to insurance company Aviva's British arm before June 2009. It was originally established in 1797. It is the biggest life insurance provider in the United Kingdom, and has a strong position in motor insurance...
in the United Kingdom. - "Pay as You Drive" is a registered trademark of Progressive CorporationProgressive CorporationThe Progressive Corporation , known as the Progressive Casualty Insurance Company through its subsidiaries, provides personal automobile insurance, and other specialty property-casualty insurance and related services in the United States....
in the US. - "Pay as You Drive" is a trademark of AZ LOGICA in Colombia, which is the main developer of PAYD in Latin America.
- "MileMeter" and "Auto Insurance By The Mile" are U.S. trademarks of MileMeter, Inc.
Drunk Driving
The use of telematics to detect drunk driving and Texting while drivingTexting while driving
Texting while driving is the act of composing, sending, reading text messages, email, or making other similar use of the web on a mobile phone while operating a motor vehicle. The practice has been viewed by many people and authorities as dangerous. It has also been ruled as the cause of some motor...
has been proposed. A US patent application combining this technology with a usage based insurance product was open for public comment on peer to patent
Peer to patent
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External links
- "Drive Less, Pay Less for Insurance" Environmental Defense Fund (Nov. 12, 2008)
- Pay-As-You-Drive Vehicle Insurance advocacy organisation (British Columbia, Canada)
- "Insurer launches per-mile cover" BBC News Report (October 5 2006)
- "Motorists 'must pay for road use' BBC News Report (December 1 2006)
- Texas Driving Research Study
- Big Brother in the Back Seat, Electronic Design Magazine, Sept. 06, 2004
- PriPAYD: Privacy Friendly Pay-As-You-Drive by Troncoso et al. (Workshop on Privacy in the Electronic Society 2007)
- Pay at the Pump