Are You Trading Privacy for a Discount?

Category: Auto

Old-school car insurers are partnering with “connected car” startups to save drivers up to 30% on their auto insurance premiums, while making driving safer and more fun. Sounds good, right? But the devil is in the details...

Gadgets That Monitor Your Driving

Major auto insurers, including Progressive and Allstate, are asking drivers to allow sensors to be installed in their cars that track drivers’ activities. The sensors track how far people drive, how often they slam on the brakes, and when they speed excessively.

This data lets insurers discover exactly who the safer drivers are, the ones less likely to file claims. In the long term, insurers hope to use such data to tailor premiums more precisely to individual drivers. But to get the data, insurers need drivers’ consent to install the sensors.

Progressive’s Snapshot program provides a discount of up to 30% to drivers who install a small device that plugs into the On-Board Diagnostics (OBD) port, which is typically located beneath the dashboard on the driver’s sidel of cars made in 1996 or later.

State Farm’s In-Drive system works with the OnStar or SYNC factory-installed monitoring systems, or an ODB port device for cars that lack one of those services.

Car and Driver Monitoring devices

Allstate’s Drivewise deal does not trim premiums, but drivers earn reward points that can be redeemed for merchandise, gift cards, or local offers.

All three insurers provide a website and mobile apps through which drivers can get feedback on their driving habits and see where improvements could lead to bigger rewards.

So how many drivers taking the bait? About one-quarter of new Progressive customers and one-third of Allstate customers are consenting to be monitored in exchange for discounts or rewards, reports Fortune magazine. Some of the holdouts may be terrible drivers, but many express concerns about privacy.

What Is Tracked and Reported?

So far, insurers only track how and how far you drive, not where you go and where you park. But such location data is surely of great interest to an insurer. If you habitually drive in high-accident areas or leave your car parked outdoors in high-crime areas, you probably pose a higher risk of loss to an insurer. But many drivers are concerned that location data might find its way into the wrong hands, legally or illegally.

Insurers track only a narrow subset of the data that is available through your car’s OBD port. A slew of third-party diagnostic and roadside assistance vendors cover much more ground.

Verizon’s Hum system, is aimed at car owners with "dumb cars" -- vehicles that don't have OnStar or in-dash displays. Hum costs $15/month, and compiles data on fuel economy, battery charge level, transmission coolant temperature, and engine error codes. It relays that data to Verizon, and a smartphone app notifies you of any problems that need attention. The app explains what error codes mean, and even provides repair cost estimates. If necessary, Hum will dial an ASE-certified mechanic in a Verizon call center to talk you through complex problems. Hum can also contact emergency services, and track your car via GPS if it’s stolen (or just misplaced in a parking lot). Location data, too, is transmitted to Verizon.

Will Verizon share all this data with marketers? The company pinky-swears that it won’t, of course. I have not found any smoking gun to prove that it does. But the Hum service is brand-new as of August, 2015, so evidence or privacy shenanigans may not have surfaced yet. The Verizon’s master privacy policy page gives details on what data is collected by the Hum device, and refers to the "Information we share" section which states that "Verizon does not sell, license or share information that individually identifies our customers... without the consent of the person whose information will be shared."

Verizon has said that Hum customers will receive offers that may be of interest to them, i. .e., discounted oil changes or tune-ups. But Verizon does not have to share your phone number with Jiffy Lube in order to make such offers.

Other Car Monitoring Gadgets

Beyond Hum’s OnStar-like service are startups with even more fancy features. Zubie provides a WiFi hotspot in your car for up to 10 devices, using Verizon 4G LTE service. However, Zubie must be added to an existing Verizon plan. Mojio is an OBD-compatible device that communicates with apps on a smartphone via 3G/GPS. It also talks to Amazon Echo (a.k.a. “Alexa”). Vinli syncs your car’s computer to all of your devices. Using T-mobile 4G LTE, it can stream any entertainment service to any device while you’re on the go.

All of these “connected car” devices and services track your car’s location constantly. That’s both a security feature and a privacy concern. I would check the privacy policy of any such device before installing it.

But how much privacy do drivers really have? Your mobile phone (even a plain old flip phone) has both a wireless radio and GPS that can be used by your mobile service provider to locate you or track your movements. Smartphones keep tabs on your location, and store that history in your Apple, Google or Microsoft account. If you have an E-Z Pass device, your location and speed can be determined by the state or agency that provides it. Maybe privacy really is history.

Your thoughts on this topic are welcome. Post your comment or question below...

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Most recent comments on "Are You Trading Privacy for a Discount?"

(See all 21 comments for this article.)

Posted by:

14 Jan 2016

Liberals will go for this BIG TIME. They like being monitored, and monitoring others.
Praise the Lord.

Posted by:

14 Jan 2016

No thanks.

Not a very informative comment on my part but I even turn the gps off on my cell. So it takes a few more steps to get directions. Every little "no" helps.

Posted by:

14 Jan 2016

Not for me, either. Do I trust all the assurances of 'not passing on your sensitive information' - I most certainly do NOT, never have, never will. Even if they were honest (some hopes), there is no system which is cast-iron unhackable. And my 9 year-old phone is turned off 99% of the time.

Posted by:

14 Jan 2016

It seems to me that more and more companies are striving, strongly, to get people to compromise their privacy by dangling (usually uncheckable) benefits. Being very sceptical, I am not left wondering why they would want all this personal information.

Posted by:

14 Jan 2016

Boy oh Boy!!! Now, the insurance companies are after us!

Let's face the facts - Insurance companies are by no means, ready to go out of business! They are about one of the wealthiest companies in the USA. This goes for both Auto and Health insurance.

I have no problem with premium increases when you live in a high-risk area, for both accidents and stealing autos. This is done and has been done, for decades. The system has worked well.

Now, it looks personal. You live out in a rural area, very, very little traffic and you may drive over the speed limit, but, with all of these gadgets, your premium may in increase due to speeding! However, you do NOT have any tickets for speeding or otherwise - How is that fair???

I can tell you, I am NOT going to get one of those gadgets. In all honesty, the Verizon Humi sounds like a good thing. This is warning you about problems with your car, especially, if you have an older car, like I do. I have a 1998 Lincoln Towncar, in very good condition and for me, knowing when I need to take care of a mechanical issue, would be a great tool.

But - What if, that all were to change and Humi became a tool for the insurance companies??? There is NO guartantee that Verizon wouldn't sell that information to insurance companies.

Posted by:

14 Jan 2016

Insurance companies already use onstar to track your mileage. I found this out when I renewed my auto insurance. Came home and disabled onstar as I did not use it anyway.

Posted by:

Jay R
14 Jan 2016

I am coming to realize that big brother has a HUGE family! Thank you for your tireless work. I must imagine that his work is tireless; unlike roofing, dry wall installation, and digging post holes. Those things make me tired.

Posted by:

James Ford
14 Jan 2016

State Farm has a similar device and I was thinking about signing up for it but after reading this article I am going to pass.

BTW, I am more Liberal than Conservative.

Posted by:

14 Jan 2016

My mom got the allstate device a couple of months ago and here in NY State they can't give the rewards, so she is supposedly going to get some premium discount (I'm told 10% or 15% if all goes well). I haven't checked their website to see what they think of her driving style (I use her car too, so it's a blend of 2 styles).
For now, the jury is out.

Posted by:

14 Jan 2016

Dear Bob,
Thanks very much for this info. Now, I know to say "NO THANKS" if I am ever offered this service.

Posted by:

15 Jan 2016

My car insurer has an app which you can put on your smartphone. This uses the phones built in g-force sensorsto monitor acceleration, braking and any other high g-force event. It also track speed via GPS and possibly location although that is not explicitly stated. The good bit about it is you only have to use it for 150Km and then it gives your driving a rating which will earn a discount. I got 20% discount then uninstalled the app. I am happy with this system, more-so than I would be with having to fit a device to the car which is then there and active all the time.

Posted by:

Maura K
15 Jan 2016

My insurer offered this a few years ago, advertising an immediate rebate or discount on premiums. In the fine print was the info that it was free for the first after one year they were going to charge me for a device that only MIGHT save me money? The possibility of being tracked and the questionable security of collected data made me say no thanks.

Posted by:

David Fox
15 Jan 2016

Bob, another great article. I have learned so much since I started getting your newsletter. My opinion is that these Ins. Company's it seems will stoop to about any level, to squeeze more money out of us. The few that say they have a saving is great ! But, what about the vast majority who will have this evidence used against them, as a way to jack up their insurance rates, and get away with it. I will not let them use me in this manor. It won't be long before we have no liberties at all.

Posted by:

15 Jan 2016

I never trust others with my information especially insurance companies who are finding ways to justify charging me more in premiums or a reason to deny an insurance claim. Even if they respect your privacy now, what about in the future? A lot of companies have data that was initially collected under a different privacy policy and they decided to change their privacy policy and now share information with others that they originally didn't share with others. I'm sure like lenders, insurance companies have employees who go through Facebook and other social media sites to collect information about you that could indicate that you are a risk such as some lenders decided that if you have Facebook friends with bad credit, you too are at risk for defaulting on a loan even if your credit score is stellar and you have never defaulted on a loan. I can see insurance companies using the fact that you go camping and drive on unpaved roads as an indication that you are at increased risk of crashing because you are pulling a trailer or because more people have rollovers in the back country. They could decide that since your Facebook friends have a lot of insurance claims that you are simply an accident waiting to happen and deny a claim or raise your rates because of this. They are in the business to find reasons that you may be at greater risk of a claim and to deny claims so any information you give them could come back to haunt you in the future.

Posted by:

Mac 'n' Cheese
15 Jan 2016

I guess I'm in the minority of those who have posted responses to this article before me.

I wish I could get that kind of program from my insurance company. It's my understanding that the state I live in disallows it. My son, in an adjoining state and with the same insurer, has such a program and saves about 20% on his insurance annually.

I've been with my insurance company for about 50 years, and I have found them to be an ally rather than an enemy. Until they betray that trust, I welcome the opportunity to work with them, not against them.

Posted by:

16 Jan 2016

For now the insurance companies offer discounts or other "bribes" to sign up. I guarantee that once adoption reaches some percentage that they feel is high enough, they will then make it mandatory to get insurance, and then they will raise premiums for the "bad" drivers. Kiss that discount goodbye.

Posted by:

18 Jan 2016

I recommend unplugging the antennas or even cutting them off any such on-star devices. Screw the man.

Posted by:

20 Jan 2016

What about the "black box" the car companies are installing unbeknownst to the buyer? So much for privacy in this "Big Brother" culture.

Posted by:

Don Hossink
15 Aug 2016

I had my car stolen from my garage while on vacation in another vehicle. In-drive told the police exactly where to find my car and when it was taken from my house! Unfortunately, they crashed the car, so....

Never did catch the buglers, because the police could not use the stops for unloading my other stuff, for just cause in the investigation.

Posted by:

05 Dec 2016

I actually use the Allstate Drivewise device. I live in Florida and received a very real 30% off of my premium which amounted to about $400. I don't drive much so I don't mind the intrusion.

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