Beginning in the state of Alabama, Progressive Insurance is rolling out a new insurance program called "MyRate," that allows drivers to customize their insurance rate based on their individual driving habits, so occasional drivers will pay less than daily commuters, for example, but those who drive more conscientiously will also be able to save.

How does this work? Well, drivers who choose to sign up for the program will have to plug a wireless device into a port in their car. The device will track where and how the car is being driven, including collecting data on things like total mileage, and whether or not the brakes are slammed with undue frequency.

Richard Hutchinson, Progressive's general manager for "MyRate" explains that the program is "… designed primarily for lower-risk drivers who are consistent and safe. They drive at low risk times of day and they keep alert for others on the road. They don't make fast lane changes or follow too closely behind other drivers so they don't have to over-react or slam on the brakes."

While all participants can earn a first-term discount of up to 10% just for joining the program, their rate may go up or down at renewal, depending on their driving habits, state regulations, and in some cases, a cost for transmitting the date from the device to Progressive. The ultimate impact could be anywhere from a 9% increase in premiums to a 60% discount.

Hutchinson is very clear about the possibility of an increase: "Because 'MyRate' could lead to a higher rate for drivers in some states, we want people to know that the program is not right for everyone. The good news is that a customer who has signed up for 'MyRate' can review their driving data in a secure part of progressive.com, see how their habits are affecting their rate, and, if they choose, make behavioral changes that can lead to real savings."

Drivers with multiple cars can work the system to their advantage by enrolling only the car that isn't driven as frequently.

The rollout began last month in Alabama and will continue throughout 2008 and 2009.