Insurance by the Mile

Drive less, pay less.  It seems to make perfect sense, doesn't it?  If you drive less, you pay less for gasoline and for maintenance items like tires, so why shouldn't you pay for your auto insurance in the same way?  There is a simple logic to it.

Now TripSense, a usage-based auto insurance discount pilot program, is being offered to 5,000 drivers in Minnesota by the Progressive group of insurance companies, the third largest provider of auto insurance in the U.S. Program participants are eligible to receive a discount of up to 25 percent depending on how much, how fast and when they drive.

"How fast?"  Hmmm.  How does that work?  Well, customers who register a vehicle in the TripSense pilot program plug a data-logging device into a port in their car, giving the insurance company the right to collect driving data that includes speed. While some might call the TripSensor, which collects the information about the vehicle's use, just an invisible passenger, others question how the data might be used.  In fact the specter of Big Brother watching our driving every second looms large.

To some the potential cash advantages may be worth having one's insurance company along as your co-pilot.  Others might be a little more jealous of letting their insurer see -- and potentially judge -- how they drive.  Participants in the TripSense program receive a five percent discount on the six-month premium for each registered vehicle. In subsequent policy periods, TripSense customers earn a five percent discount if they choose to upload their driving data to Progressive. Customers can also receive up to 20 percent more in discounts based on how much, how fast and when they drive. Sharing driving data with Progressive is always optional, but necessary to earn a discount in future policy terms.

Progressive tested this usage-based insurance discount program in Minnesota in early 2004 when it offered 250 drivers $25 to plug a data logging device into their vehicles to collect information for 30 days, upload their data to Progressive and complete a survey about the experience. In the test, a discount on future policy periods was not offered, but had it been, the average member of the test group would have been eligible for a 7.5 percent discount on the registered vehicle in the next policy period.

Once installed, TripSensor records how much, how fast and when the vehicle is driven. This information is used to calculate the discount the customer may receive when they renew their policy. A note to those who like to accelerate briskly from a stop, TripSensor also collects information about rapid acceleration and braking that is not currently used to calculate the discount. The company says it is collecting this information to better understand if it is predictive of future accidents.
  
Incidentally, this is the second time Progressive has gone down this road.  The company was the first to test a usage-based insurance program that retrofitted Global Positioning System (GPS) and cellular technology into customers' vehicles to calculate premium based in part on how much, when and where the vehicle was driven. This test, conducted in Texas, started in 1998 and concluded in 2001. While Progressive says the Texas test proved customers liked usage-based insurance because it saved them money and gave them more control over the cost of their auto insurance, it was discontinued due to high costs and complex installation logistics.

Now, as the cost of electronic continues to fall, it will be interesting to see if usage-based insurance catches on.  And it will also be interesting to see how much information drivers will be willing to share with their insurance companies.

Driving Today Managing Editor Jack R. Nerad writes frequently about car ownership issues, including auto insurance.

Is Your Car Who You Are?

Some people claim you are what you drive.  But is that true?  After all, a lot of people also claim that you are what you eat, and I eat a lot of pork chops.  Does that make me a pig?  Please be nice in how you answer that.

Be that as it may, there is little doubt that millions of Americans love their cars and identify with them.  In fact, they believe that what they drive says a lot about them.  And because they often feel like their cars are family members, they try to take good care of them.  Now a new survey from Shell, created to help publicize the introduction of V-Power gasoline, has taken a unique and sometimes sideways look at how Americans view their cars.  And the results are surprising, amusing and maybe a little frightening.

When asked to compare their cars to a character from the popular sitcom "Friends," nearly half (46 percent) of those surveyed likened their car to dull but dependable Ross Gellar.  Some 12 percent said their car reminded them of Rachel Green, because it's stylish and classic, and a solid 10 percent cited a resemblance to Monica Gellar Bing, because it's neat and in control.   As to the other "Friends" characters, obviously they are not as car-like.  Only seven percent of respondents said their car recalled the free-spirited and pleasantly ditzy Phoebe Buffay, and only six percent said their vehicle reminded them of the sexy Joey Tribbiani or the witty Chandler Bing.

Although many people told the survey they enjoy washing their own car, others wouldn't mind a little extra help when it comes to car-cleaning chores. And just as it's nice to have help with household cleaning duties, many Americans wouldn't mind tapping the resources of a famous housekeeper to assist with day-to-day car care. When asked which famous housekeeper they'd hire to handle their car-cleaning duties, women indicated that they'd be most likely to hire Alice from "The Brady Bunch" (22 percent) or Tony, the handsome housekeeper from "Who's the Boss" (22 percent). Men were more likely to turn to Geoffrey, the butler from "The Fresh Prince of Bel-Air" (23 percent), to keep their automobile looking good.

When focus shifts from washing to driving, Americans get revved up at the thought of slipping behind the wheel of a famous TV or movie car. When asked which famous car they'd most like to drive, the largest percentage (27 percent) of survey respondents said they'd take the wheel of David Hasselhoff's Firebird K.I.T.T. from "Knight Rider," while 21 percent preferred the Batmobile from the movie and television show "Batman." The General Lee from the television show "The Dukes of Hazzard" was the lust-object for 20 percent, while Herbie the Love Bug from the movie "The Love Bug" garnered 10 percent.  Well behind the leaders were Greased Lightning from the movie "Grease" (seven percent) and the Ectomobile from the movie "Ghostbusters" (two percent).

The "Shell V-Power Consumer Car Care Survey" was conducted in May 2004 by Focus Research, Inc.  It was conducted by telephone with a random sampling of 1,032 Americans 18 years of age or older.

Driving Today contributor Luigi Fraschini is based in Cleveland.  His fantasy ride is the early Sixties Corvette from the classic television show "Route 66."

 

The Depreciation Dilemma

Don't let anybody kid you -- buying a new car is not a "good investment."  A good investment is something that should appreciate in value or in some other way make you money.  Well, one thing is sure, the new car you buy today is not going to gain in value over the course of time, so you are much better off looking at a new vehicle as an expense.  And good business sense suggests that you should do everything you can to minimize your auto expense.  But, of course, most people don't even come close to doing that.  They have been brainwashed to believe that a brand-new car is an important symbol of their status and success and, further, that they need to acquire one of these totems every two or three years or so.  That's great for car manufacturers, not so great for your personal financial well-being.

There is, however, one important step you can take in minimizing the loss you are going to take on a new-vehicle acquisition -- pick a vehicle that is predicted to have good re-sale value.  Of course, you can't tell exactly how good its re-sale value is until you try to re-sell it, but you can come close...if you do your homework.

Unfortunately for their own financial position, most people don't like to take the time to do this kind of homework.  Plus, they don't really know where to start.  Which is why we at Driving Today are here to serve you.  You see there is an industry organization that tracks and predicts re-sale value, and it has been doing so for decades.  Now it is beginning to make a version of this data available to the public.

Automotive Lease Guide (ALG) has begun to publish the "ALG Depreciation Ratings." The one- through five-star ALG ratings provide you with an accurate and convenient method to compare the amount of depreciation one vehicle versus another will experience over the lifetime of ownership. The ALG Depreciation Ratings are now available on Edmunds.

The ratings are distinguished from ALG's standard industry residual values in that they utilize the actual transaction price that consumers pay for a vehicle as opposed to the Manufacturer Suggested Retail Price (MSRP) as the starting point. In addition, the multi-star system is designed to be consumer-friendly and to provide a range of depreciation.

"The depreciation ratings are a natural extension of ALG's residual forecasting expertise. Retained value has become an important purchase decision in this era of incentives, and these ratings will be extremely useful for automotive purchasers," said John Blair, ALG's chief executive officer.

You can tell he doesn't talk to the general public much, but what he's getting at is true.  The new ratings can be extremely helpful because the recent trend of aggressive automotive incentives creates a large gap between the MSRP and the actual transaction price of a vehicle. This means that predicting re-sale value becomes very difficult for consumers, and comparisons between models even more difficult.  The ALG Depreciation Ratings will incorporate ALG econometrics (that's a good thing) and Edmunds's "True Market Value" as well as other market factors.

Using the new data still won't make your new-vehicle purchase a financial windfall, but it can help you avoid taking an unneeded bath by being hit with unexpected depreciation.  In fact unexpected depreciation, not unintended acceleration, is the major pitfall in buying a new car.

The author of The Complete Idiot's Guide to Buying or Leasing a Car, Jack R. Nerad serves as Driving Today's managing editor.

Mizen to Malin Rally, Part II

To call the Irish MINI Owners Club's Mizen to Malin event a "rally" is to misidentify it.  A rally implies competition.  The Mizen to Malin event is more like a three-day-long group hug.  And this year we got a chance to be part of it, as we chronicled last week in this column.

When we last left you, we were about to cross the River Shannon aboard a ferry that looked something like an oversized landing craft, and in the process we put aboard 70-plus MINIs -- some new, some of uncertain vintage -- along with more than 150 drivers, passengers and party-crashers.  Among those on the ferry were two fashionably dressed, attractive young women who seemed to stand out among the mostly working-class, salt-of-the-earth folk who composed the bulk of the rally participants.  Using the camera as our calling card, Rich (unmarried Rich) discovered they were British magazine journalists who were on the rally just as we were.  Nice work, buddy.  

Once we completed the windswept passage, most of the MINI drivers hit the ground running for the next milepost on the journey, while we paused to take stock of what was possible and advisable in our quest to capture the event on video.  One, we could drive like the hell-bent leaders of the rally pack, have a great time and come back with indifferent video or, two, we could hang back from the good-natured mayhem, shoot plenty of video and come away with a piece that looked like fun while actually being somewhat less so.

Though the former seemed very tempting -- after all when MINIs are roaring past you, the natural tendency is to join them -- we opted for the latter.  We would take our time poking about through the picturesque Irish countryside, while the others charged ahead.  And this is just what we did, videotaping our way through Quilty and Spanish Point, grabbing a pastry from a movie set-like storefront in Milltown Malbay and then hugging the western Irish coast to the breathtaking Cliffs of Moher.

The journey proved to be a time-warp back to a place where the highways are two lanes with no shoulders, the country roads are one lane-and-a-half and the secondary roads nothing but cowpaths. As befitting the Emerald Isle and its frequent rainfall, the countryside was a lush green, punctuated by stone fences that could have been erected while the United States was still a British colony.

On we drove into Galway, which turned out to be a bustling workaday city all the more busy because it was on the verge of a "bank holiday."  Asked by Rich to do a simple drive-by for the camera, I was inadvertently propelled into a maze of one-way streets, centuries-old buildings and indecipherable street signs, and after losing sight of my three compatriots I became immediately convinced I would never see them again.  Ten minutes later, when I had somehow negotiated my way back to where I had last seen my camera crew, they had vanished.  Then insistent traffic sent me on the great circle again, and twenty more minutes elapsed before I found my "mates" and we pressed onward.

The compressed urban downtown of Galway quickly gave way to more bucolic scenery as we wound our way past Lough Corrib and Lough Mask on our way to Rosses Point on a spit of land just north of Sligo.  There, looking out on the Atlantic Ocean, we settled into the Yeats County Hotel, where the party quickly began again.  (Parties seem to pop up in Ireland like tornados pop up in Nebraska in the summertime.)

Sandwiched around our video duties -- in this case it was our job to capture the frivolity of the drinking, dancing and lounging rather than partake ourselves -- Rich continued to angle for a connection with Sue, the German-born British writer/photographer whom we first met on the Shannon River ferry.  I, of course, watched this with the bemused effect of an older and distinctly married guy who had run this same course years before.

When morning dawned all too early, we bade a fond farewell to the Gerard O'Leary and the rally participants.  They were headed to Malin Head, the northernmost point in Ireland, while we and, to Rich's great delight, Sue and her driving mate, set our sights on Dublin, clear across Ireland on the Irish Sea.  This route put us on the N4, which seemed like a superhighway compared to what we had traversed the day before, but it still dallied charmingly in little burgs like Carrick-on-Shannon, Ballinalack and Roosky. 

Somehow the Irish sky had turned bright and sunshiny, not anything we expected, so the cruise into Dublin not only showed the excellent mettle of the MINI Cooper S that was our stallion, it also lifted our spirits still higher.  And Dublin proved a delight. 

We deposited our vehicles at The Fitzwilliam Hotel on St. Stephen's Green and made a lengthy foray onto the pedestrian mall called Grafton Street.  Crossing the River Liffey on the Millennium Bridge, we shared cigars (ah, male bonding) as Rich and I searched for toys for our children.  That evening, with Rich still in warm pursuit of the somewhat elusive German woman, we walked over to the Temple Bar area where we dined on traditional Irish fare with the fine group that MINI had invited to participate in the rally.  My corned beef and cabbage (could I have ordered anything else?) was truly spectacular.  Or was it just the aura of the whole event that colored my thinking?

Following the meal we walked up the street to a chic (as opposed to a traditional Irish-style) bar, where we threw back a little Irish whisky and Rich worked his American charms on Sue.  He seemed to be making decent headway, but when Sue's English companion suggested we go find a dance club, Rich and I wisely took a pass and joined the older crowd headed back to the hotel.

By then our MINI Cooper S was but a fond memory, as was the participation in the rally itself.  But as we prepared to leave Ireland, we immediately had a longing to return to spend more time with the remarkably hospitable people of the Emerald Isle.  And if we could do that while piloting a MINI Cooper S, ah, all the better.   

Mizen to Malin Rally, Part I

It seemed like old times.  Maybe that was because it was like old times.  Back more than a decade ago when I was Editor of Motor Trend magazine, I used to go on drive after drive after drive, chronicling each with a feature story.  I drove across the continent of Australia in a Corvette to witness the America's Cup yacht races.  I drove through the Baltic States in a Saab as the Soviet Union was crumbling.  I drove across the United States at the introduction of a now vanished brand of automobile for a story called "From Sea to Sterling Sea."  I even drove a circle through Yugoslavia in a Yugo as that country was collapsing into chaos for a story we titled "Wherever Yugo There You Are." 

But times do change.  I left Motor Trend in 1991 to work for a car company, and I subsequently worked for J.D. Power and Associates before assuming the co-host duties on "America on the Road," a nationally syndicated radio show, and, of course, the Managing Editor post here at Driving Today.  Because of the changes, and because my responsibilities limited my ability to travel, it had been a long time since I had done the last "adventure drive."  So when I got the call from Jeremy Louwerse, my producer at ESPN's "Cold Pizza" morning show, to go to Ireland to drive in the Mizen to Malin Rally in a new MINI Cooper S, I was more than ready to get back in the saddle.  The difference this time was that I would be doing the story for TV rather than for a magazine.

Louwerse teamed me with West Coast-based producer Rich Bornstein, who has worked with some pretty talented movie stars (and some pretty untalented ones for that matter), so I had a bit of trepidation about how the partnership would work.  Oh, I've done enough television now that I don't bump into the furniture too much, and the sight of a lens in my face doesn't turn me into a blubbering mass of jelly, but at the same time this Bornstein guy has worked with pros, people who actually do this stuff for a living.  How would he react to the likes of me?

Well, from the second we talked on the phone, I knew I shouldn't have worried.  Rich is a lifelong baseball fan with young kids, just like yours truly, so we hit it off right away.  By the time we'd flown the Atlantic together, negotiated the security at London's Heathrow airport and landed amidst the greenery of County Cork, we were buddies ready to take on the challenge of getting seven or eight minutes of good TV out of our 12,000 mile journey.

Our tireless Irish production team - Eamon Taggart and Phil O'Reilly - met us at the airport, and as we made our way through the picturesque southern Irish lanes to the Oceanside resort of Kenmare we became certain we had struck gold in these two buckos.  Eamon and Phil knew the territory in a way we could never hope to, and they were gifted with enough blarney to charm even the most reluctant rally participant into an interview.

Not that too many of these friendly Irish folk proved tough to talk to.  They are blessed with an easy friendliness epitomized by our first interview subject, Gerard O'Leary, who runs a shop specializing in second-hand MINIs and is the leading light of the rally.  Operated to benefit a children's hospital, the annual event is obviously a labor of love.

"I fell in love with MINIs at an early age," O'Leary told us as we filmed participant's coming up a corkscrew grade to join the tour.  "There's just something about the car that puts a smile on your face."

After testing our new MINI Cooper S, and more particularly our ability to pilot a right-hand-drive model on the left hand side of the road, we rendezvoused at the Kenmare Bay Hotel in County Kerry, the kickoff point for the event.  We immediately discovered that, like an army, the Irish MINI Owners Club travels on its stomach.  The gathered throng of about 80 MINI owners and their driving mates set down to a substantial dinner, accompanied by quantities of Guinness and harder spirits that were a bit out of keeping with our planned 4:30 am wakeup call.  Hey, who needs sleep after a 14-hour plane flight and six additional hours of driving and interviews?

Next morning - Disaster!  Our 4:30 am wakeup call came at 5:30.  By the time I had splashed in the shower, thrown stuff in my overnight bag and headed into the car park filled with MINIs, most of the drivers were preparing to hit the road.  No time for the interviews we'd planned, but as Rich and I scurried to catch up, there were Eamon and Phil videotapinging away.  God bless 'em.

It turns out that the hotel lacks an automated wakeup call system, and the hotel operator had to make every wakeup call individually.  Since about 80 wakeup calls were scheduled for 4:30, the last of them - ours included - weren't completed until an hour later.  Hmmmm.

The mix-up put us a little behind the curve, but we dashed into our waiting Cooper S and roared off in time to pass a long line of MINIs, old and new, that were waiting to be staged for the beginning of the comfortably loose "rally."  This allowed us to take our position in the gray winds of Moll's Gap as the line of MINIs came roaring through.

Dropping down the other side of the incline we followed the parade of MINIs northward through Killarney and then Tralee.  The day had dawned leaden, and we drove on under threatening skies toward a ferry crossing of the River Shannon a few miles west of Limerick wondering what was in store for us.

What would the rest of the trip hold?  Would we survive the narrow Irish roads filled with wrong-way traffic?  Would we be able to follow the rally route while simultaneously shooting footage for TV?  And who were those ladies in the red Cooper S?  They sure didn't look like anybody else we'd seen. 

That and more to come in Part II.  Next week.  (Hey, I'm even starting to write like a TV guy.)