[DRIVE] Trading Privacy for a Discount?

Category: Auto

Old-school car insurers are using new-fangled “connected car” technology 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

I recently switched auto insurance companies, and the agent told me that I could get a discount on my new policy if I plugged in a little gadget under the dsahboard. 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 when and how far people drive, how often they slam on the brakes, if they speed excessively, and other driving data points.

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. Given what I know about digital privacy, and how large corporations store, share, and secure data, I politely declined.

Here's some information to help you figure out if using one of these devices will result in lower (or possibly higher) auto insurance rates, and other things you should know before you make a decision about using one.

Car and Driver Monitoring devices

Progressive’s Snapshot program provides an average discount of $20-$25 a month 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 side of cars made in 1996 or later. The device measures a variety of factors related to your driving, including the times of day you drive, sudden changes in speed (hard brakes and rapid accelerations) and the amount you drive. Progressive says most customers will earn a discount, but if the device indicates risky driving that increases the likelihood of being in an accident, you may pay a higher rate at renewal time.

State Farm’s In-Drive system uses OnStar and a Bluetooth beacon that works in conjunction with your smartphone. It offers you an automatic 5% discount with the possibility to save up to 50% on your auto insurance. State Farm says they collect mileage and, in some cases, basic driving characteristics to calculate your discount.

If you use Allstate’s Drivewise gadget, you can save "up to 10%" off your auto policy when you sign up, and "up to 32%" off your policy every six months for your everyday safe driving. (Not sure how they calculate the "up to's" but it's probably based on how well do regarding these criteria: Safe Speeds (below 80 mph), Safe Hours (limit late-night trips), Safe Stops (limit hard braking), and Low Mileage (skip those long trips). Sounds to me that if you work nights, or enjoy road trips, you'll be penalized, even if you're otherwise an excellent driver.

What Is Tracked and Reported?

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 (myself included) have concerns about privacy.

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. 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 http://goo.gl/vC9oEQ 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. 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 and other driving data constantly. That’s both a security feature and a privacy concern. I would check the privacy policy of any such device before installing it. Even with all the assurances of "not passing on your sensitive information to a third party," can we really trust these companies any more than Facebook to resist the temptation to "monetize" your driving habits and history? And there are always data breaches.

So 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 "[DRIVE] Trading Privacy for a Discount?"

(See all 23 comments for this article.)

Posted by:

Larry
10 Apr 2018

I consented to try this out with a new company I had just signed with. I faithfully let it keep track of both of my cars for three months. The estimates I got said I should get a discount of between 12-15% on my auto insurance.

I got a five dollar rebate in the mail! When my insurance came up again this year, the rate was 12.9% higher. My insurance agent said the company had raised rates across the board.

So much for a discount. I think it's a bait and switch marketing option. I'll never do it again and would never encourage anyone to try it... and I will be getting another insurance company.


Posted by:

Ken Mitchell
10 Apr 2018

Too bad you can't make the insurance companies guarantee to provide lifetime credit fraud monitoring if they're ever hacked. You know, like happened to Equifax.


Posted by:

Jim
10 Apr 2018

Fuhgeddaboudit!


Posted by:

anonymous
10 Apr 2018

Remember, auto insurance companies share all information about you with other auto insurance companies.

This is in an effort to combat insurance fraud of course, but it was disturbing to discover what they know about me when I recently switched companies.


Posted by:

bobrice
10 Apr 2018

I think anyone who trusts insurance companies to control this data is dreaming. No thanks.


Posted by:

bill
10 Apr 2018

I tried one of these for a short time (not with my insurance company) and came to the conclusion that they were not intending to have many people come out ahead.
The two black marks that would have come against me were occasional accelerations that were too fast and too fast of stops.
It would beep when accelerating too fast so I knew when those were. I needed to get turn left onto a busy street on my way to work so you have to get up to traffic speed (40 mph) quickly.
They listed their braking limits so I looked up the timing for yellow light times. If you were to follow their deceleration rate, you would need to run some red lights.


Posted by:

Phil
10 Apr 2018

Every few years I shop for auto insurance. I just did that as my policy expired just 5 days ago.

When I was shopping I kept in the back of my mind thoughts of the discounts offered by some companies that use the data device. I live in a part of NJ where rates are high and I've been with GEICO for about 6 years now without a data collector.

I don't work for GEICO and don't represent them in any way, shape or manner but even factoring in the discounts offered by insurers that use a data device they couldn't beat GEICO's rates for me.

Even if they could beat GEICO's rate the discount would have to be substantial for me to get plugged in to yet another personal data collector.


Posted by:

Robert A.
10 Apr 2018

I'm guessing if you have either a 800 + horsepower Dodge Challenger Hellcat or Demon and a lead foot, you're insurance rates will accelerate fast than the car. if you have one of these devices plugged into the car.

With all the hacking of electronic devices, these days, I wouldn't be surprised if some hacker cracked the coding of these devices and reprogrammed them to always show slow accelerations and soft braking and top speeds of just 55 MPH.

Seriously, it would be better if the insurance companies offered a true 10-15% discount for any driver that completed a safe-driver course that offered true accident avoidance training.


Posted by:

Brian
10 Apr 2018

It's fairly obvious to me where this is going. In the not too distant future, anyone who does not sign up to this "data collection" will be considered to be hiding bad driving habits by the insurance industry, and slugged mercilessly. It's almost as immoral as health insurers pushing for DNA tests for all health cover.


Posted by:

Brian Squibb
11 Apr 2018

I, like many others I suspect will add a little extra pressure to foot brake when reversing out of my driveway. This automatically adjusts the brakes. What will the device do with data? report you as almost hitting something every 10th time you pull out of your own home? Doing the right thing may cost you points.


Posted by:

Phrog
11 Apr 2018

We did this on our vehicles a couple of years ago. The website we could access showed a map of our travels and where we went too fast, braked too hard, etc. We received a 10% discount on our insurance, which we still have. One family member lived in another state and bought their own vehicle and decided to stay with the same insurance company. They told this family member that the device should work in the new vehicle -- until there were problems with the battery being drained overnight and the auto repair determining it was the device. Once the device was left off, no more battery problems! After contacting the insurance agent, the family member was told that they had discontinued the program in that state since the devices were causing too many problems! So no discount for the insurance on the new vehicle...


Posted by:

SysOp404
11 Apr 2018

Blinded by the prospect of receiving a substantial discount, I made the mistake of letting an auto insurance company monitor my vehicles with their devices, for what they said would "probably be for 1-3 months". It ended up being 6 months and felt more like 6 years. You can bet I kept close tabs on the results their site showed for both my car and my mini van. The stats were amazingly skewed - to the point that you'd swear two different people were driving them, even though I was the only one.

Anything other than slow acceleration or deceleration, triggered one/two tones in the vehicles and added line-item events on my records. A quick-changing traffic light (ESPECIALLY with so many intersections now having cameras) causes everyone to brake hard to avoid receiving a ticket in the mail, so they're guaranteed a fair number of line-items from those. And I lost track of how many times drivers ahead of me slapped on their brakes unexpectedly due to false starts, bad judgement, lapses in attention, texting or talking on phones, nearly running over pedestrians or whatever, so... the company gets to rack up some more line-items for our inability to predict others' stupidity. (Apparently, ESP is expected, to qualify for their best discounts.)

I called the company several times over the months to challenge line-items shown, especially since I had to crawl through construction zones DAILY, with heavy equipment lunging in and out of traffic or workers appearing out-of-nowhere in front of us... The company always had someone with a soothing, not-to-worry voice assuring me that they were aware those kinds of things can happen and suggesting not following the car ahead so closely (what, in bumper-to-bumper traffic traveling less than 5 mph???)

In the end, I learned to be a much safer driver... driving at times when NO pedestrians or other cars were out-and-around doing ignorant stuff ahead of me or honking behind to get me to speed up; going miles out-of-my-way to reroute errands, avoiding all construction zones AND most importantly, staying away from all intersections with cameras, so I could blow-through quick-changing red-lights, not having to touch that dreaded brake pedal.

The tiny discount I ended up with for a half-year of unnecessary stress, was laughable and didn't come close to paying for all the extra gas and wasted time. Never again. E-V-E-R!


Posted by:

cal67
11 Apr 2018

So right now they offer discounts of "UP TO...." and make this voluntary. I can guarantee that once they reach some threshold of acceptance, it will become mandatory and if you are a "bad" driver, your rates will go up quickly.


Posted by:

SharonH
11 Apr 2018

This monitoring system is out of touch with the reality of everyday driving. If you have to brake really hard to avoid a collision, is that counted against you? Absurd.

Just a gimmick to make drivers think they can substantially lower their rates. These companies are not on your side.


Posted by:

Will
11 Apr 2018

I used this and received a 20% discount, but I'm retired so my time of day driving probably helped. However, I was able to correlate their "hard braking" to yellow lights. It taught me to run yellow lights. !! I wrote them (Right-Track) and they gave a total BS response and said their algorithm was appropriate. My running of yellow lights reduced the "hard braking" issue.


Posted by:

Mike
11 Apr 2018

I have done this with Liberty Mutual. First when I signed up and the next when my teens started to drive. Needed to get the best discount available. Everyone who agrees to use the monitor for 90 days automatically gets a 5% discount up to 35%. I got an 8% discount and my wife a 6%. Teens got 5% as expected. Other than the privacy issues discussed, I have found that it is nearly impossible to get more than an 8% discount unless you never drive after 12 midnight, never accelerate more 1-2 mph in a few seconds and never brake more than similar rate. What appears to be normal braking and acceleration without anything unusual happening, you get dinged for "hard " braking and "rapid acceleration".
Therefore, under the guise of discounts that are nearly impossible to obtain is the tracking part that as mentioned, is a real issue.


Posted by:

Brian L
11 Apr 2018

I don't think I would get very many discounts...


Posted by:

Brian L
11 Apr 2018

I don't think I would get very many discounts...


Posted by:

Russ
12 Apr 2018

Also using the liberty mutual sensor/recorder... the program is ALWAYS active... even if your not near a car or driving. Bugs me... Anyway, I feel I drive fairly conservatively, but it will on occasion say I'm too fast or brake too hard. I agree with others that their measure of accuracy is NOT realistic. Its fussy and does not seem to be to quick with real time assessment... It is fun to tease my kid that the monitor is keeping track and hope it helps him be a better driver. I wish I could just monitor our driving on an app from our phones...


Posted by:

gene j
20 Apr 2018

I used Allstate for years, the last two I used their gadget. It doesn't work in a northern state. If your car has ABS, you are going to slide, chitter, from time to time, they call that hard braking. I thought the whole thing was a nightmare. Then I discovered USAA, as I'm a veteran, they not only cut my rate in HALF, they're a dream to work with. I'll never use a gadget like that again. Privacy is about all we have left these days. And we need to protect it as it is being eroded everywhere you look.


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