How far will you go to save or earn money? The folks at the Progressive Group (NYSE:PGR) insurance company conducted a survey and found that for $500, 35% of people would switch political parties, 37% would give up their sense of smell, 19% would give up their sense of taste for six months, 62% would give up going to the movies, and 21% would stop watching TV. Some were even willing to go one round with Mike Tyson. Jeepers.
These people may be happy to learn that there's a relatively less painful way to save money on auto insurance in the offing. In the United Kingdom, a major insurance company, Norwich Union, is testing an innovative system that involves drivers installing a small device in their car that uses global positioning satellite technology to tell Norwich Union where the vehicle is. The longer your vehicle is in safer regions, the greater the auto insurance discount you'll qualify for.
Meanwhile, in the U.S., Progressive is testing a somewhat less invasive system. Drivers install a small device in their car that records how fast they drive. The information is stored in the device, not automatically sent to Progressive. A few times a year, drivers can download the data onto their computer, look at it, determine what kind of discount they'll qualify for (5% to 25% is the expected range), and decide whether or not to submit their results for the discount.
It remains to be seen whether others in the industry, such as GEICO, a unit of Warren Buffett's Berkshire Hathaway (NYSE:BRK.A, BRK.B); USAA; Allstate (NYSE:ALL); and State Farm, follow suit.
So far, this seems fairly innocuous and perhaps a good thing, encouraging safer driving habits and offering a financial reward to those who earn it. Lives will likely be saved. Yet there are some potential downsides, as well.
Economist Tyler Cowen at MarginalRevolution.com offered this take: "Overall I don't view this as a welcome development.. Better monitoring and quality differentiation can make insurance markets work worse rather than better.. If the company could predict exactly who will have an accident, they won't sell insurance [to those people] at all. Plus, my libertarian blood gives me 'slippery slope' fears about this information ending up in the hands of government. Furthermore, it is easy to imagine the practice becoming less voluntary over time."
There are less invasive ways to save on your car insurance and other kinds of insurance. Learn more in our Insurance Center -- it's not the most exciting topic, but you can save yourself and your loved ones a lot of trouble and money by making sure you have the coverages you need. See what advice and experiences Fools are sharing on our Insurance discussion board, too -- we're offering a free trial of all our boards right now.
Longtime Fool contributor Selena Maranjian owns shares of Berkshire Hathaway.
