ROSEVILLE, Minn. — An auto insurance program based around usage could spell cost-savings across the board and change the face of future policies. The program, which began in August and was in its testing phase at press time, rewards drivers who log fewer miles and drive slower than other motorists. 

Progressive announced it would offer the discount plan to the first 5,000 vehicles registered at tripsense.progressive.com. Also known as TripSense, the program includes a free matchbox-sized module, or TripSensor™, that plugs into the on-board diagnostic (OBDII) port, located near the steering column in vehicles made in 1996 or later. OBDII ports are also used to read other types of vehicle information, like emissions data. 

“Drivers who reduce their risk of being involved in an accident by driving less, driving during lower risk hours or driving slower will be rewarded in this discount program,” says Jim Haas, Minnesota auto insurance product manager for Progressive.

The testing phase is mainly focused on residential customers as Progressive takes a “wait and see” approach to offering it to all drivers nationwide, commercial fleets included, says Progressive Spokesperson William Perry.

“We are optimistic it will be successful,” he says. “If everything falls into place, we’d like to make it more widespread in other states.”

Each vehicle that registers receives an automatic 5-percent discount for the six-month premium period. Those who choose to upload driving data to Progressive via computer hookup will receive a    5-percent discount in subsequent policy periods.

The more significant savings, up to 20 percent, will occur when the insurance company interprets the driver’s data. For example, a usage discount of up to 15 percent will be offered based on how much and when the vehicle was driven, and another 5 percent will be added to or subtracted from the usage discount depending on how much time the vehicle was above or below 75 mph.

“Anything you can do to arrive at a more accurate and fairly priced product is the driving force behind what we’re trying to do,” adds Perry.

Also collected, but not a part of the discount, will be information regarding rapid acceleration and braking. Progressive plans to use this data for future accident prevention.

The data also will allow drivers the chance to view a day-by-day travel log, as well as anonymously compare how their driving habits stack up against those of other drivers.

“If you wanted to compare (your driving) to all males in your age group, you can compare it to other demographic groups, with all the other participants,” says Perry.

The reading devices are a customized version of modules made by Hayward, Calif.-based Davis Instruments Corp. The company also manufactures chips for fleet management, as well as specialized fleet management software, which keeps track of driver performance, vehicle usage and accidents.

Progressive embarked on a similar program in Texas in which a retrofitted Global Position System (GPS) and cellular technology were installed into vehicles to calculate discounts much like the company’s current pilot program. Conducted from 1998 to 2001, the GPS program was discontinued because of high costs and “complex installation logistics,” according to the company. 

Perry says the current program will be much more cost-effective and has a better chance of survival. “(The GPS program) was cutting edge-technology back then. It was a big-ticket item; certainly more than people wanted to pay,” he adds. “People loved the idea, but the cost of installation and logistics were too great.”