Discounts on safe driving are cheaper, but you lose your privacy

"Good drivers should pay less," says Robert Hunter, insurance director of the Consumer Federation of America. "Your driving style, not who you are, should determine your rate."

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Discounts can be important for good drivers. Thanks to Nationwide's SmartRide solution, discounts can reach 40%, says David Arango, executive vice president of personal lines, which includes the automotive and home sectors. Alex Timm, CEO of Root Insurance, the start-up that insures Aminov-Tobin, allows the best drivers to cut their rates by about half. According to the leaders of both companies, typical savings are around 20%.

Drivers with low mileage can also benefit. Evan Makovsky, 42, of Hoboken, NJ, estimates that he has saved $ 1,000 a year by switching to Metromile, which applies a monthly base rate plus a per mile rate. Makovsky drives his Volkswagen Passat 2009 especially at weekends.

But rates are not always better with usage-based insurance. For example, if you change jobs and have a longer commute, a per-kilometer payment policy may become expensive. And with Progressive's Snapshot program, which tracks your driving, rates increase for about 20% of drivers, according to the insurer. According to Arango, bad drivers will not pay extra to Nationwide, but they may lose their initial downsizing.

Data privacy issues

The question of whether the price reduction is worth the privacy that you give up by monitoring your conduct depends on your perception of the risks.

Aminov-Tobin was not worried: "If you want the best rates, you have to sacrifice a bit," he says.

But Jen King, privacy expert, fears that drivers are sacrificing more than they realize.

"Wherever you go every day can tell people a lot about what interests you, where you live, who you associate with," said King, director of privacy at the Center for the Internet and Society. Stanford Law School.

Even if the information is not sold, she explains, it could be used unexpectedly by the driver.

Another threat to data security is Zhu de Purdue. It highlights the 2013 violation in which cyberattackers stole personal information from millions of customers. Zhu says his research revealed that after the violation, drivers were more likely to give up auto insurance related to their use.

Nevertheless, UBI seems to be gaining ground. A study by J.D. Power showed that 10% of policyholders used such programs in 2018, compared with 8% in the previous two years. Although policies are not universally available, the National Association of Insurance Commissioners estimates that 7 out of 10 automobile insurers will use surveillance technology by next year.

Ask before you buy

Use-based insurance policies vary. Some track brakes, idle and acceleration; others focus on mileage. Some watch driving for a limited time; others continue to follow. It is therefore important to shop around and ask questions.

The CFA hunter asks insurers to know exactly what information the insurer will collect and whether they are really related to good behavior. Also ask:

• How each bit of data affects your rate.
• If you can refuse to share the information without penalty.
• If the company will share or sell your data.

And remember that driving data is only part of your insurance rate, says Janet Ruiz, director of strategic communications for the Insurance Information Institute.

"The most important thing that consumers can do with their auto insurance is to have a good, safe driving record," she says.

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