Money Talks: Pay As You Drive Auto Insurance

The amount you pay for your car insurance is related to factors like your age, gender, location and driving record. But what if you don't drive much, or have safe habits? Shouldn't you pay less?

Thanks to a new type of insurance, you can now sometimes get a brake by letting the insurance company see how you drive. It's a concept called Pay As You Drive Insurance.

Richard Hitchinson, Progressive Insurance, says " The way it works is that you would share your driving data with the company. And with this data we'd have the ability to see if you're a particularly safe driver or if you drive less often and it would end up in a personalized discount which could be as much as 30 percent."

Sounds good. But there's a catch:

They want to monitor your driving. GMAC uses On-Star system to track the number of miles you drive. But some companies go a lot farther: They plug something into your car's computer, and they start tracking time of day you're traveling, how your braking and even if you're speeding.

Different companies monitor different things: GMAC only tracks mileage, Progressive doesn't monitor speed, but does monitor braking and if you're driving after midnight.

That's a concern for some consumer advocates. told us "consumers shouldn't be penalized with higher rates if they choose to protect their privacy."

Bottom line? Pay as you drive could be a good solution if you're willing to trade information for lower rates. But be sure to verify the discount before you go down this road. Want more information? It's parked right here at