Would You Sacrifice Privacy for Lower Car Insurance Premiums?

Myrate_device
If you drive infrequently, you should pay less for car insurance compared with someone who’s on the road all the time, right? That only seems fair, yet to benefit from “pay as you drive” insurance, would you let a company monitor your movements?

This is the sticky situation that insurers and consumers are trying to figure out.

Usage-based insurance relies on a small monitor hooked up to the car’s diagnostic port. It calculates a driver’s risk by measuring miles driven, acceleration, braking, speed and possibly where the car is being driven using a GPS. This allows the insurer to forgo normal risk factors, such as age and driving record, in favor of real-world information about a person’s driving habits.

Price used to be an obstacle for these units, costing as much as $500 to $1,000 per vehicle. That has now fallen to about $175. Progressive Insurance introduced a system like this in 2004 called MyRate. It now offers the policy in 19 states, though rules for the program vary.

Would you give up some privacy for lower premiums? Would you mind having your movements tracked by your insurer? Let us know in the comments.

Is Privacy Worth Sacrificing to Save on Insurance? (Wheels)

By Stephen Markley | March 24, 2010 | Comments (27)
Tags: In The News

Comments 

Tony

I don't understand why somebody always want to track you, etc. Each car has electronic odometer and each year it is inspected and mileage is written. And if in some states it is not then you can arrange a service to do so. So then the tax authority can simply issue the bill based on the odometer. And for insurance, they can send you a bill based on average and adjust it in the end of the year and give you the refund or request more money. And if you don't give the money, they can register you in the database where another insurer will view your record ans will have to deny you insurance until you are clear.
This will not be intrusive and we should be fine with it because as it stands right now the Prius drivers pay less tax then most of us or the same mileage while their cars are not lighter.

smokin88lx

I don't get this either. Every year my insurance company sends me a form for the odometer readings of my vehicles. They have different rates for how much each is driven. 2500-5000, 5000-7500, 7500-10000, etc. This is more to track your driving habits not miles driven and charge you accordingly. Just another way to scam to make them more money.

GR

The automotive insurance industry has made ENOUGH profit. No reason why they should invade our privacy any more so they can "save us some money". How about they stop spending so much money on media blitzes?

They already have their noses in our credit reports as part of the criteria for determining our rates. That's crazy ... how does credit worthiness affect driving skill?

Everybody knows that vehicles are exponentially safer today than they were just fifteen years ago. No reason why we should be paying higher rates for the medical portion of our policies. Granted, the cars cost more to replace, but a $20,000 payout on an automobile is much better than a couple hundred thousand for a lost life.

Dan

The real question here is, "Would you pay more for privacy?" No one will see a drop in insurance rates because they agree to monitoring.
The reason for this is simple. If you're a bad driver, you'll never opt for monitoring, so you'll keep paying the same, and the good drivers who do opt will pay less. This will cause a drop in revenue for the company while still incurring the same risks, and the same costs. In order to maintain profits, prices will rise on everyone, leaving those without privacy paying what they pay today, and those with privacy to pay more.
Allowing these devices into the market will raise your rates even if you don't participate. These are universally bad for drivers.

Peppy

What about older cars where the PCM doesn't hold the miles or anything? on the 1gn Neons the PCM doesn't do anything with miles, just engine electrical.

Jones

Dan makes a good point. Most "bad drivers" would not go for this. Now that I am no longer in my 20s or single, I wouldn't go for it either as the statistics work in my favor. Unless the savings (or cost not to have it) make it a no brainer.

Zack

There's a much better idea for doing a mileage based insurance rate - create a nationwide insurance pool for all drivers, financed by a dedicated gasoline tax. Let's say ten cents per gallon is diverted to the insurance fund. Everybody's covered, there are no uninsured. Existing insurance companies are assigned regions to handle claims. A dime per gallon would generate $37 million per day to cover accident damage. Your first accident is zero deductible. Deductible rises with subsequent crashes. People who drive more miles pay more into the insurance pool. No tracking devices needed!

T2

That's the dumbest idea I've ever heard of. You need to lay off the weed.

Zack

^
Junior Insurance sales trainee.

Tony

Zack,
it is not bad idea but the problem is coming from a bad Prius driver.

Lourens

You are missing the point. It is not to monitor how much you drive but to monitor your driving behaviour. Insurers charge more for a 20 year old because of the perception that their driving behaviour is poor. If a 20 year old think he is a better driver than others and opt for driving monitoring (speeds travelled, time of day travel, etc.) this gives him the opportunity to get a better premium than the "average" 20 year old.

Zack

That's problematic. People who work at night and drive at night would be penalized because of the time of day, even though they're sober and safe. Evasive maneuvers that prevent accidents might also result in higher rates. Drivers that tend to speed would be penalized, even though oftentimes they are better drivers and a lower risk.

Electronic monitoring and "privacy" are non-issues. This blog and the resulting comments pile error upon ignorance. Everyone seems to be an authority on per-mile pricing of auto insurance except the man who pioneered and developed the concept - Patrick Butler PhD, Director of the NOW Insurance Project whose authoritative work, online at www.centspermilenow.org, began in 1983. For example, Progressive misleads the public to think that this pricing method requires elaborate electronic recording systems. All nonsense. Only one insurer gets it right - Dallas company MileMeter (www.milemeter.com) - sells insured miles at a per-odometer mile class rate that lets the customer top up as needed. This streamlined product can save money for any car owner whose car is driven less than average for its class, is out of service, or simply parked in the driveway at home.
Bloggers should start with the facts before spinning opinions out of thin air.

David Weiser

I don't need to be tracked by an insurance company. When they have the information they will probably sell it to retailers and I will be bonbarded with offers from store I visit, pass, or get close to.

This is a real fact and we should take care of certain things while making an insurance deal, here is one more site related to auto insurance, i have personally used it, its good. just take a look and tell me whether it is really what i think or not http://www.oakland-car-insurance.info/

Mr. Cheap

It is an invasion of privacy. Big Brother is watching you. The problem is that Progressive gets a competitive advantage by using these tracking devices and other insurance companies have to start using them to be competitive. Pretty soon you will have no choice but to let the insurance company monitor your driving habits if you want insurance. It's just like the grocery stores with their bogus "club cards", they are tracking your purchases. All of these data points are like pixels on a television screen, innocent enough by themselves, but when these huge conglomerates begin trading these databases among themselves, they know more about you than you know about yourself. I recently changed car insurance, and the lowest offer I got was from Progressive but I rejected it because I don't want to support companies that engage in this kind of behavior.

Garry

If it saves me money, it is a no brainer. I have three kids in college. My 14 year old Saturn takes me to work, to the gas station, to the bank and home. Why would I care if my insurer knows this?
A good point was made earlier by Dan. Dan is correct in saying the insurance company will be faced with the same overall risk if the group of drivers they insure stays constant-except for the additional costs of implementing and maintaining the proposed program.
The only possible benefits would be to the good drivers, and then only if the entire group of insured drivers can be FORCED to carry the monitors. Only with every member of the group being monitored could the insurance carrier fairly distribute the cost of the insurance coverage for the entire group over the individual members of the group. Fairness to the good drivers would require infringement on the privacy of the bad drivers and their right to drive like morons.
So I would be glad to forego my privacy for monetary gain, but the only way it will work is if I can throw yours to the wolves as well.

Alex

It makes perfect sense. Insurance companies have to jig the money paid in by policy holders to match money paid out in claims, plus a bit extra for operating expenses and profit. Data shows that the people who get in the least crashes (i.e., who cause fewest insurance payouts) are the ones who don't speed, who accelerate and decelerate more slowly, who take turns at lower speeds, etc... If you can put all those people into a risk pool by directly monitoring their driving behavior rather than by trying to guess at their driving behavior by using age and gender and car color as a proxy, then you could offer this group sustainably lower rates. They cause less money to be paid in claims, so they don't need to pay as much in to cover the cost of those eventual claims that do happen (even they would obviously still have SOME crashes).

And the best thing is that it would encourage safe driving behavior, because you can literally directly save money by driving better. It would actually use market forces to save lives, and you can't say that about many things.

People who opt out of the system might get a little bit screwed, though, if most of the good drivers opt in - because then opting out will become a reasonable proxy for "likely to be in more crashes," and they will be charged a premium accordingly. That might not be entirely fair in all cases, but there are always some people who lose in any system, and right now it is the conscientious 20 year old guys who drive safely yet pay enormous premiums on the back of their many 20 year old idiot male compatriots.

The only bad part is the privacy tradeoff. Presumably you would need a law to force the devices not to remember the actual places traveled to, only the aggregate driving patterns (average time at each speed, average rates of acceleration, etc). I don't know if the company would voluntarily relinquish that data without something prodding them - unless people refused to sign up without this guarantee, and I don't know they would.

Mr. Cheap

It's a matter of principle. Its not because I want to drive like an idiot. I haven't had an accident in over 10 years, and the only tickets I've had in 10 years were for burned out lights. I don't want a big corporation tracking my movements on the planet. Let me offer a comparison. Suppose your homeowners insurance offered you a discount if you let them mount a camera in your kitchen so they could make sure you didn't leave the oven on. Of course, they will also see everything else that you do there, but they "promise" they won't use that information against you in the future? Would you do it? Yeah, I know that sounds paranoid, and we're not at that point yet, but we are heading in that direction.

Alex

@Mr. Cheap, ok, but let's say they just invented a detector that could tell when your oven was on, and had a motion detector in the kitchen. All it does is flag when the oven is on for more than, say, 4 consecutive hours without any motion in the kitchen.

It's kind of silly, but perhaps a better analogue for how you could set up a device to record only the information of interest.

Though I agree that I'm not sure I'd trust them without some kind of watchdog keeping an eye.

Mr. Cheap

Alex, you make a good point, and I suspect there are already ovens which can turn themselves off, anyway. That was just the best analogy I could think of on the fly. The fact is, once you agree to let them collect that data, THEY OWN IT and can sell it to whomever they choose. By your posts, I see you understand the potential for abuse; my point, for whomever may read this thread, is that once this kind of thing becomes publicly accepted, it becomes increasingly difficult to get the necessary consumer protection laws enacted.

Of course, the way the technology is moving is the RFID chip. Today, they want to put a chip in your car. In 5 or 10 years, they will want to put a chip in YOU! And I'm sure they'll attach it to some "discount program" to entice people to have the chip implanted. If you want to read about some very scary and depressing things, go to www.spychips.com

Stephen Vandivere

No one has discussed the degree of privacy lost versus the savings that might be realized. Under ordinary circumstances, that would be what I would ask first. But I drive a Miata. While I don't speed more than average on the straight, I love the cornering.

Another potential value of the device. Suppose the device, assuming real-time monitoring is involved, senses an unexpected or abrupt change in the middle of nowhere (GPS here). Could this mean an accident and the nearest responder dispatched to check it out. Might save your life. Here's a case where I would gladly trade a certain kind of privacy to save my life.

But the big question is how much savings for how much invasion of privacy.

Smith

The answer is a resounding "No"!

David Reddy

NO.

Zack

There's no way an insurance company will lower anybody's rates based on this gizmo. They will, however, use any excuse they can concoct to raise the rates of the unlucky victims of this invasion of privacy.

Glenn H

Heck no! Progressive can just KMA with this lame idea! This is only to the advantage of thier bottom line profit. The CONsumer never wins at this type of crap!

Bullwhip

I just got a quote from Progressive, and they offered the gizmo. The price was over $2200/year yet the discount was $38 for using the gizmo - what a rip!!

In any case AAA's rate is over $500 cheaper. No go progressive. You spend too much money on advertising - go lower your costs.

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