Choose Car Insurance by Value, Not Technology

Pay as You Drive (PAYD) technology is beginning to transform the way car insurance companies determine a driver’s risk, which in turn determines how much a driver pays for insurance. Progressive led the way with its innovative Snapshot program. When a customer signs up for Snapshot, Progressive mails the customer a small digital tracking device that plugs directly into a car’s computer. The device will keep track of how many miles the car is driven as well as other information like how hard the brakes are applied or how fast the car travels. The consumer benefits from lower insurance rates, while Progressive benefits from the wealth of data they receive about a driver’s real driving habits.

Progressive Anxious to Protect Technology

The company spent over 15 years developing the tracking device technology, and it was well aware that other companies would be interested in copying the new system. In fact, Progressive was so interested in protecting itself from other companies stealing the new technology that it entered into a rare privacy agreement with state insurance regulators so that the details of the program are not publicly available. The move was intended to limit competitors from gaining valuable insight into the Snapshot program and slow down their ability to create their own pay as you drive technology.

Allstate Device Strikingly Similar to Progressive’s

In early 2011, Allstate released its own pay as you drive policy that featured a plug-in tracking device very much like the device Progressive uses. The Allstate program is only available in Illinois at the moment, though, while Progressive advertises that their Snapshot program is available in more than 32 states. Regardless of the availability, Progressive was quick to cry foul when Allstate’s new program and device were unveiled. Progressive filed a lawsuit against Allstate claiming that Allstate infringed on several Progressive patents.

Settlement Results in Allstate Paying Progressive for Rights

The two national car insurance companies were able to reach a settlement earlier this month over the patent infringement charges. The companies have entered into a trademark-agreement regarding the discount plan surrounding the pay as you drive technology, and Allstate has agreed to purchase a license for the patented technology involved in the pay as you drive tracking device. Progressive’s chief legal officer released a statement that the company has always been willing to sell access to the technology, but they felt obligated to protect the years and research dollars they had previously invested in the project. Progressive’s lawsuit served as a reminder that the company is willing to use the courts to retain their intellectual property rights.

What does this mean to you? It means that choosing between Allstate and Progressive makes little difference if you qualify for a Pay as You Drive programs. No single PAYD technology has proven itself superior to any other, and because they are so similar, you’re likely to realize similar results. Since both companies use the same technology, you should be paying attention to customer service and overall rates.

One Response to “Choose Car Insurance by Value, Not Technology”

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