Rachel Bodine graduated from college with a BA in English. She has since worked as a Feature Writer in the insurance industry and gained a deep knowledge of state and countrywide insurance laws and rates. Her research and writing focus on helping readers understand their insurance coverage and how to find savings. Her expert advice on insurance has been featured on sites like PhotoEnforced, All...

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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Reviewed by Jeffrey Johnson
Insurance Lawyer Jeffrey Johnson

UPDATED: Jan 18, 2021

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GM’s OnStar

General Motors is struggling to keep OnStar alive. Though the product has been popular with consumers, the company is facing stiff competition from other manufacturers that offer many of the same or comparable services for free. GM, on the other hand, charges OnStar subscribers $200 to $300 a year.

Similar to the way in which homeowners get a home insurance discount for installing safety features such as alarms and fire detectors, GM is partnering with auto insurers to offer car insurance rate reductions to those who use OnStar for subscribing to that service. Actually, that philosophy makes sense, since OnStar can locate stolen cars quickly and call for help when there’s an accident, reducing emergency response time and, subsequently, saving insurance companies a lot of money.

So what—and who—is GM competing with in this market? Ford’s Sync system seems much more advanced than OnStar, with a smoother user interface, simpler Web connectivity and social interaction. OnStar, it seems, is playing catch-up in these areas. In addition, many smartphone apps and dash-top satellite navigational devices offer maps, directions, roadside assistance and other communications free of charge.

OnStar’s one advantage over its competitors: the ability to call for help in an accident, whether the driver is conscious or not. You can’t do that with a smartphone!

However, like everything, the issue simply boils down to cost. If OnStar is going to continue competing, it’s going to have to sweeten the pot, find ways to lure customers in, and convince them its product is worth the dough.

Thus come car insurance rate reductions, already begun by GMAC Insurance. This insurer uses odometer readings pulled directly from vehicles and based on miles driven, so the less customers drive, the bigger their discount.

GM hopes that other insurers, like Century 21 and Liberty Mutual, will soon join in and follow GMAC’s example. Meanwhile, let’s hope its competitors don’t swallow it up!