Big Brother device lets drivers cut auto insurance bill

Progressive Corp. and GMAC Insurance are testing devices that track driving habits, and offering discounts on auto insurance for measured good driving.

Drivers who participate in these plans have devices installed in their cars that, depending on the technology used, can track the number of miles driven, the speed at which cars are driven and even how often and how hard the brakes are used. By allowing their habits behind the wheel to be monitored, drivers get lower insurance rates -- or pay higher premiums if they're lead-footed road hogs.

Usage-based insurance pricing would mean an estimated two-thirds of households would pay less in premiums than they do now, according to a report by the Hamilton Project at the Brookings Institution, a think tank. Researchers Jason Bordoff and Pascal Noel calculated average savings at about $270 per car, per year. Some analysts and insurers believe that after a slow start, usage-based insurance could take off now that higher gas prices are forcing consumers to drive less anyway.

So, there's a chance that using the device can backfire on a driver, increasing his or her premiums. I can imagine the arguments among family members using a shared car when the insurance company reports bad driving based on the device and ups the insurance premiums.