ANCHOR: DEBORAH ROBERTS / REPORTER: ELISABETH LEAMY

DEBORAH ROBERTS (ABC NEWS): (Off-camera) Now a ‘GMA" ‘Consumer Alert." Should safe drivers who drive less than others pay lower car insurance premiums?

GRAPHICS: WATCHING YOU AT THE WHEEL — PROGRAM CUTS PREMIUMS IN HALF

DEBORAH ROBERTS (ABC NEWS): (Off-camera) Well, that’s the logic behind a new kind of car insurance. But there’s a catch, your insurance company would monitor your driving with a little device like this every time you get behind the wheel. Consumer correspondent Elisabeth Leamy joins us from Washington now with the details. Elisabeth?

ELISABETH LEAMY (ABC NEWS): (Off-camera) Hey, Deborah, that’s right. It’s kind of like having Big Brother riding shotgun in your car with you. This is the device. All you do is plug it in and, sure enough, your insurance company can track how much you drive and how you drive.

When Carolyn Harris runs her weekly errands, she isn’t just thinking about how much she’s paying for gas or groceries. She’s also wondering how the trip will affect her car insurance.

CAROLYN HARRIS (PAY-AS-YOU-DRIVE CUSTOMER): When you’re on social security and work part time, you’re always kind of looking for ways to save money.

ELISABETH LEAMY (ABC NEWS): (Voiceover) Last year, Harris signed up for a program which rewards safe and limited driving with lower insurance rates. It’s called Pay-As-You-Drive or usage-based insurance. Both Progressive and GMAC have begun rolling out the program. GMAC’s plan simply tracks mileage using the OnStar GPS system. The less drivers drive, the less they pay. The company says customers save between 13% and 54% a year. Progressive’s program, which Harris has, uses a small device that plugs into her dashboard, spying on how far, how fast and how carefully she drives.

GLENN RENWICK (CEO): This is all about just generally how do you use your vehicle, over a long period of time do you present more or less risk than other people.

ELISABETH LEAMY (ABC NEWS): (Voiceover) But privacy advocates argue these programs give insurers access to a wealth of information they don’t need and can then use against drivers.

CARMEN BALBER (ADVOCATE): This could create another trove of information out there. It’ll add to that pool information that’s out there and being used and sold, frankly, in ways that I can’t even comprehend.

ELISABETH LEAMY (ABC NEWS): (Voiceover) Carolyn Harris says for her, sharing that information has paid off. Since signing up, her yearly rates have dropped $120.

CAROLYN HARRIS (PAY-AS-YOU-DRIVE CUSTOMER): You know, I probably am giving up some privacy, but as far as I’m concerned, the trade-off is worth it.

ELISABETH LEAMY (ABC NEWS): (Voiceover) And the money she saves?

CAROLYN HARRIS (PAY-AS-YOU-DRIVE CUSTOMER): I’ll probably use them to buy gas.

ELISABETH LEAMY (ABC NEWS): (Off-camera) All right. There are some more traditional ways to save money on car insurance as a reminder. Many of us stick with the same car insurance company that our parents used. Do shop around.

GRAPHICS: SHOP AROUND FOR BEST PRICE

ELISABETH LEAMY (ABC NEWS): (Off-camera) You’d be amazed how much going to a different company can save you money. You can also raise your deductible. If you just raise it from $200 up to $500, that’s often a 30% savings.

GRAPHICS: RAISE YOUR DEDUCTIBLE

ELISABETH LEAMY (ABC NEWS): (Off-camera) And if you have an older car, really beat up car that’s not worth repairing after a collision, you can actually consider skipping the collision coverage. And that’s a big savings, Deborah.

DEBORAH ROBERTS (ABC NEWS): (Off-camera) All good advice, Elisabeth. Now, what if you file a lot of claims…

ELISABETH LEAMY (ABC NEWS): (Off-camera) Yeah.

DEBORAH ROBERTS (ABC NEWS): (Off-camera) …does that affect your rate?

ELISABETH LEAMY (ABC NEWS): (Off-camera) It sure does. In fact, you should be careful to only file claims for major things that the insurance is really for. They have a term in the insurance industry called non-renewal. They could actually cancel you if you file too many frivolous claims.

DEBORAH ROBERTS (ABC NEWS): (Off-camera) So maybe you keep the small ones to yourself. All right, Elisabeth Leamy, as always, thanks.

ELISABETH LEAMY (ABC NEWS): (Off-camera) Exactly.