Financial IQ

Save More and Worry Less with Mileage-Based Car Insurance for Teen Drivers

If you put relatively few miles on your car or are a parent and worry about your teen-aged driver, you may appreciate a mileage-based auto insurance program.

The program works much like it sounds—and it makes sense for people who drive less, want to do so, or own another, much less-used car.

At the heart of the program is a palm-sized device that plugs into your car’s diagnostic port, which is usually found under the steering wheel. Most vehicles manufactured after 1996 are equipped with such outlets.

The mechanism tracks mileage, time of day the car is in use, location on the road, and a driver’s overall performance. For parents of young drivers, these features are a bonus.

Drive less and save more

First, consider the tangible savings. At Travelers, customers receive an automatic discount in their auto policy simply for enrolling in the mileage-based program; they also may qualify for a future larger premium discount linked to miles at the wheel.

With that financial incentive, you may be more strategic in planning time on the road. And that can mean even more savings.

Cutting your hours behind the wheel means fewer chances for accidents, reduced wear-and-tear on a vehicle and lower maintenance costs.

There’s even a green advantage: decreased driving translates into a smaller carbon footprint.     

An Opportunity to Boost Driving Skills

Another key benefit is the program’s potential to help people improve their road skills. At Travelers, drivers can log in—at no cost—to a dashboard on a secure website that shows how hard they brake and how fast they drive.

For almost any driver, this dispassionate portrayal can go a long way toward recognizing and breaking bad habits; it also can reinforce and inspire good ones.

For families of teen-aged drivers, these reports are priceless. In addition to when and where adolescents are on the road, the dashboard data shows their speed and rate of acceleration.

Much like parental controls on cell phones, the dashboard also allows parents to set up time and distance parameters for their teens. If their children stray from the pre-set limits, parents may opt to receive text or email alerts about such instances.

More important, the dashboard reports provide an invaluable coaching opportunity for parents of young drivers. In some cases, this coaching can be life-saving.

Car accidents are the leading cause of death among American teenagers. Adolescents are also the most dangerous drivers, involved in three times as many fatal crashes as all other drivers, according to the National Highway Traffic Safety Administration.

Ultimately, novice drivers, regardless of age, are most likely to have an accident.

The reports come from an objective source—the monitor in the car’s port— and help ease the age-old struggle between parents voicing realistic concerns and teens downplaying such worries.

Now, families can simply log into the dashboard together on a regular basis and, using the data, talk about how to enhance their children’s driving skills—and even perhaps their own.

Creating an ongoing conversation between parent and child on such a vital topic is simply invaluable.

Tony Hare is managing product director for Travelers Personal Insurance.