NC Answers: Why are some safe driving insurance discounts not allowed in North Carolina?

Major car insurers now give customers the option to have their driving habits tracked in exchange for discounted rates.

Drivers can download apps and put telematic devices into their cars that monitor their vehicles’ speed, braking, cornering, total miles, and more.

But the discount programs of many major insurance companies aren’t available in North Carolina, and North Carolina officials say there’s good reason why.

Why some car insurance programs aren't approved

Each of the country’s 10 largest car insurers has its own safe driving discount program, with many sporting similar names like Drivewise, Drive Safe & Save, and DriveEasy. But it's up to each state to approve the programs.

The apps and devices record a trove of information, like how hard a car breaks, how smoothly it turns a corner, what time of day it’s being driven, total miles, and how much one uses their phone while driving. All this and more gets calculated to determine drivers’ discounts.

Insurers hope these discount programs incentivize safer driving which reduces costly accidents. They also see it as a way to better align prices with risk.

"Some of their customers are more risky than others so the insurance companies would like to price that policy based on how risky a driver the customer is," said Adam Jones, an economics professor at UNC-Wilmington.

Insurance companies can also use the data to better understand broader driving habits and detect insurance fraud.

Most safe driving programs offer clients an initial discount just for signing up, then allow for greater savings based on driving performance. But under many programs, more dangerous driving can lead to premium increases.

That the driving data insurers collect could be used to raise premiums doesn’t sit well with the North Carolina Department of Insurance, which negotiates car insurance rates on behalf of the public. All discount programs are considered deviations from the negotiated rates and must receive NCDOI approval.

“Some of the apps are not approved because the insurance companies haven't been able to demonstrate that they won't use it to increase the premiums for some drivers,” said NCDOI spokesperson Barry Smith.

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According to Smith, North Carolina doesn’t allow discount programs that have the potential to raise drivers' premiums above the figure reached by the NCDOI and the North Carolina Rate Bureau, which represents the insurance industry in negotiations.

Many insurers don’t hide the fact that their programs could result in higher premiums.

When describing its Snapshot program online, Progressive states “most Snapshot customers earn a discount based on their safe driving. However, riskier driving based on these factors indicate a greater likelihood of being in an accident and may result in a higher rate at renewal.”

Progressive, the nation’s third largest auto insurance company, has its Snapshot discount available in every state but North Carolina and California.

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What car insurance discounts does NC allow?

The NCDOI has approved several telematic discount programs from a number of major insurers like Allstate, Nationwide, Geico, and Travelers.

State Farm, the largest insurance company in the county, is also able to offer its Drive Safe & Save program, which includes an initial 10% discount with further opportunities for lower rates based on driving behaviors.

All North Carolina drivers are required to have insurance, and Smith says there are at least 125 insurers currently covering drivers in the state.

With or without safe driving discounts, many drivers may already be getting a relatively decent deal on their rates: According to the U.S. News, North Carolina has the nation's 7th cheapest car insurance rates.

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Brian Gordon is a statewide reporter with the USA Today Network in North Carolina. Feel free to email him at bgordon@gannett.com or follow him on Twitter @skyoutbriout

This article originally appeared on Asheville Citizen Times: NC safe driver insurance discounts for Progressive, more are limited