A new concept in determining auto insurance bills is coming to the state with the nation’s highest average rates: pay-as-you-drive.

For the first time, a New Jersey auto insurance company wants to equip cars with high-tech devices that constantly track motorists’ driving habits to determine how much they should pay.

Starting Aug. 8, Progressive Corp. will offer discounts to its 127,000 Garden State drivers if they install in their cars wireless devices that tell the insurer how many miles they drive, what time they’re out on the road, and how often and how fast they accelerate and hit the brakes.

The company is dangling 60 percent rate discounts for the best drivers. Those who quickly rev up or slam their brakes, however, could face surcharges as high as 9 percent.

New Jersey will be only the fifth state with the pay-as-you-drive devices offered by the insurer.

Progressive’s Hutchinson admits privacy has been a concern since the program started with a pilot project in 1999. He said the devices do not include GPS locators that would enable the company to track every movement. “The primary concern that comes up is: ‘Are you tracking my whereabouts?'” he said.

Just like car owners with EZ-Pass toll transponders, drivers with computers may obtain access to all monitoring data online and see how they compare with others in the state, he said. While the data is subject to subpoenas or court orders, so far the company hasn’t received any. The company does not sell the data to third-party marketers.

Allstate, New Jersey’s second largest insurer, is testing devices that monitor traffic and attempt to avoid accidents. A few other companies that do not do business in New Jersey also electronically track driving behavior.

(Source: Star Ledger)