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Seat belts and air bags have played a major role in reducing accident fatalities and injuries over the last few decades and that has helped to bring down the cost of auto insurance for many consumers.

The latest advances are turning our cars into something out of Buck Rogers. We can start them remotely, we can talk to our family and friends via embedded blue tooth devices and passengers (the kids) can sit back and watch a movie. Cars are now parallel parking themselves, which is probably good news for the people, who tap and bump their way into tight spots.

GPS devices, as well as other gadgets, can collect information about how many miles we actually drive as well as other actuarially useful information. By agreeing to turn that data over to insurance companies, drivers can qualify for lower rates.

Businesses with commercial fleets as well as individual drivers stand to benefit from the new developments on this front. Commercial auto insurance can be one of a company's big insurance expenditures and anything that can help save a few bucks is a good thing.

The pay-as-you-drive (PAYD) concept is not new, but it's beginning to catch on with advances in technology and changes in auto insurance regulation.

Devices are becoming increasingly sophisticated and are now improving on their ability to capture critical information in addition to miles driven, such as where those miles were driven and when.

New technology is also making it easier for insurers to collect the data from drivers.

Progressive Insurance's MyRate program, for instance, uses a small wireless device that gathers information about how, how much and when the car is being driven and then transmits that data wirelessly and automatically back to the insurer.

As interest in PAYD, or usage-based auto insurance grows, more states are encouraging implementation of PAYD programs. PAYD auto insurance policies are already an option in 34 states and California amended its regulations last year to allow for PAYD auto insurance by fall of 2009.

State and federal officials are getting behind PAYD because research suggests that if premiums were charged based on miles driven, there would be a reduction in driving and related congestion, along with fewer crashes and less pollution.

More insurers are also interested in making PAYD available to customers as they move to protect their business from competitors and expand their product offerings.

In a survey of 163 insurance company representatives, 59 percent said their companies had investigated or considered offering a PAYD product, according to Exigen Insurance Solutions.

Nearly half of respondents said the cost of implementing PAYD products into their systems is their major barrier. Twenty percent cited consumer privacy concerns, 18 percent the cost of telemetry devices, 14 percent state insurance regulations and 4 percent existing PAYD patent infringement.

Although some people, like my husband, don't like the idea of having their every move monitored, these programs are voluntary. And where company fleets are concerned, it may not be a bad idea to know where the employees are going when out on company business.

PATRICIA VOWINKEL has worked for national media outlets for more than 20 years.

April 15, 2009

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