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The Little Black Box That Can Save You 30% on Your Car Insurance

There are a number of factors that influence your car insurance rates in Florida, California and other states. One of the hardest for insurers to detect is your driving style. That's why programs like accident forgiveness and factors such as the amount of time between accidents can play an increased role in your policy costs. But those factors are all focused on the end result of good driving (or bad driving). Some new programs from some major insurers now want to figure out whether or not you're a good driver before something happens.

How does this car insurance savings plan work?

There have been “black box” recording devices for cars for years. Fleet truck companies and parents have installed them to track the performance of drivers. They use GPS, and the car's computer to track how fast drivers are going, how quickly they accelerate and brake, and a number of other factors.

Car insurance companies are now using the same technology in a bid to find safe drivers. Progressive is just the latest insurer, and their current program offers between 1 percent and 30 percent savings based on how you drive (your rates cannot be reduced if you're a speed demon).

What measurements are taken by car insurance companies?

Progressive's new device measures differences in acceleration, meaning how hard you push on the gas pedal and how hard you brake. The company reports that it doesn't measure speed because of the difficulty in matching speeds with posted limits across the country. What is also tracked is the number of miles driven. This can be good for a number of motorists who overestimate the miles they drive each year, which is a major culprit in many instances where people overpay for their insurance. Other driving activities that can be detected are sharp lane changes and turns at a high rate of speed.

What other companies offer similar programs for car insurance discounts?

State Farm and Allstate both offer programs that monitor driving. State Farm in particular offers discounts of up to 45 percent off their regular rates, and this is primarily based on the mileage driven. There is a State Farm variant tied to General Motors' OnStar System, however, so is not available to all customers.

Allstate's program is currently only a pilot program, but closely resembles that of Progressive and is expected to expand. State Farm's non-OnStar program is available in 20 states.

Is it worth it to have my driving monitored?

You probably have a good sense of whether or not you drive calmly or whether or not other drivers sometimes get on your nerves. Because the process is mostly anonymous and does not include speeding, it could provide a large amount of savings for many motorists, particularly if you may not be driving as much as you are reporting to your insurer. Privacy advocates are somewhat concerned, but there seems to be little evidence of the car insurance companies using the data for nefarious purposes.

Note that in all cases, you need to drive for between one and six months for the insurer to assess your driving style.