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Insurers increasingly provide telematics-based coverage that helps lower policy costs (Photo: Allstate)

Insurers are increasingly offering voluntary programs that use telematics devices to track driver behavior, according to the US Insurance Information Institute.

The III, an insurance industry lobbying group, said in a press release that insurers have long used policyholders' reported mileage and driving records to calculate rates. But now, it said, telematics "are taking estimates out of the equation and delivering data straight from driver to insurer."

At least 13 US insurers are already providing usage based or pay-as-you-drive policies that offer discounts to low-mileage drivers.

Telematics devices are not just used to track miles driven. They can also be used to take into account driver behavior.

"Policyholders who tend to drive at less risky times of the day and whose driving habits reflect an awareness of road safety receive a lower rate,” the III said.

State Farm, a major US insurer, this month introduced a new In-Drive service, which uses a device inserted into a vehicle’s diagnostic plug to monitor speed, acceleration, braking and other data. The company said In-Drive could help save policyholders 20 pc on their premiums.

Policyholders can also plug into the company’s Drive Safe & Save plan, which rewards motorists for logging low mileage.

Other insurers such as Progressive and Allstate are offering comparable plans.

The III said the new telematics-driven policies could also help improve driver safety because they provide "more immediate feedback to the individual driver about the riskiness of his or her behavior and therefore may be more successful in changing bad habits.”