OnStar subscribers who drive less can now pay less for their auto insurance — if they use GMAC Insurance.
The two service providers, joined by their General Motors Corp. heritage, have teamed up to make available a low-mileage discount of up to 54% for customers who drive less than 15,000 miles annually and give OnStar the OK to send mileage reports straight from their vehicles to the insurer.
For a person whose current annual insurance rate is $800, the discount would lower the rate by $101 to $432 annually, depending on the mileage, GMAC says.
GMAC Insurance President and CEO Gary Kusumi said mileage is the primary indicator of insurance risk, and pairing with OnStar to get actual monthly mileage reports gives the insurer the ability for the first time to offer such a discount.
“In 75 years, the insurance industry has never had a way to accurately tie the number of miles a consumer drives to the insurance rate,” Kusumi said.
Without a way of verifying a vehicle's mileage, he said, insurers often did not offer a low-mileage discount, because they worried consumers would underreport their mileage.
This alleviates that concern, he said.
But consumers may not want OnStar, a GM division, to allow GMAC, which is 49% owned by GM, to monitor their driving habits and patterns.
Because of that, Kusumi said, the low-mileage discount will be offered only on an opt-in basis.
“One of the key issues with the technology is this question of Big Brother and privacy,” he said.
The only thing OnStar will report to GMAC is mileage, OnStar President Chet Huber said.
“This program is perfect for families with second or third vehicles that are driven by stay-at-home spouses, retirees, college students or used at second homes,” Huber said. In many of those instances, the vehicles rack up few miles, he said.
