Driving safely with less mileage could save you big cash

FRESNO, Calif. -- Roger Lane recently signed up for usage-based car insurance.

"I decided to do it really for the saving," Lane said.

He's hoping to save 20 to 30 percent off the $2,500 he's been paying yearly on premiums, but with a tradeoff: drive safely and log fewer miles.

Numerous major insurance companies like State Farm, Nationwide, Allstate and Liberty Mutual offer the program.

Using a smartphone app and a tag or dongle, insurance carriers monitor acceleration, braking, cornering, speed and phone use. The carriers then provide a score.

"This last trip gave me a rating of 5 stars," Lane said.

If your score indicates low-risk driving, your premiums could be reduced significantly. In some cases, up to 50 percent.

"I think that this gives an extra impetus to really follow speed limits," Lane said.

To get the discount, you'll also need to watch how far you drive. State Farm, for example, considers 7,500 miles a year or less as low mileage.

But if your driving suggests risky behavior, some insurers could charge you even more.

And while some companies say they don't share your information, for some people, privacy may be a concern.

"If you're in an accident, your information can be used, for example, by law enforcement," says Tobie Stanger, a Consumer Reports Money Editor.

"I don't have a problem with that," Lane said. "I have a cell phone as it is, so the fact that I could save money by being watched is acceptable."