OnStar planning mileage-based insurance discounts

21 Oct 2010

OnStar is in discussions about lining up insurance discounts for its customers as a way to incentivize consumers to keep the $199-plus annual subscription to General Motors' telematics service, President Chris Preuss said.

The talks, which include Century 21 and Liberty Mutual, are complicated, as each state regulates insurance companies differently, Preuss said in an interview.

But OnStar is making progress: State Farm insurance is launching an OnStar discount pilot effort in California later this year on top of one begun in Ohio last year, he said. Discounts vary based on miles driven.

GM is reinvigorating its OnStar safety-service brand in an attempt to catch up with the marketing boost Ford has received from the smart phone and mp3-player connectivity offered by its Microsoft-powered Sync system.

OnStar subscriptions of varying lengths are included in the purchase of most GM vehicles, but once those run out, drivers must pay $199 annually for safety features or $299 for extra services such as navigation.

Ford's Sync costs $395 with a directions package requiring a $60 annual subscription after the first three years.

Half of GM drivers keep OnStar once the promotional period expires, and 60 percent of those driver renew later. OnStar may be able to line up more discounts for subscribers once it launches technology next year that allows families to track certain drivers, such as high-risk teenage son, Preuss said. OnStar could provide that data to insurance companies to help them assess the risk posed by individuals.