Learn more about insurance driving apps, how they can impact your rate, and why they may do more harm than good.
Safe driving saves you money because it means you’re less likely to get into an auto accident and make a claim to cover the damages from the accident. It shows insurance companies that there is less risk in providing you with coverage.
To encourage safe driving, many large insurance companies have good driving programs where they monitor your driving habits and incentivize you to drive more safely.
However, they set the standards and then monitor your driving habits or the habit of anyone that would use your vehicle. Without regulations or standards to protect you!.
The Basics about Insurance Driving Apps
Considered usage-based insurance, driving apps are offered by insurance companies to incentivize safe driving. With the use of smartphones, the technology has become more widespread since first program in 1998.
These apps or devices monitor your driving and keep track of factors that are considered risky while driving. They let the insurance company decide if you may be more likely to get into an auto accident and file a costly claim.
Some programs require tracking for a set period of time, such as the first 30 days. Most require continuous monitoring to maintain a safe driver discount. In this case, the discount is often applied when the driver renews their policy, sometimes six months after starting to track their driving using an app.
Many of the insurance companies have usage-based insurance programs with apps including Drivewise from Allstate, Signal from Farmers, and SmartRide from Nationwide.
These programs are fairly similar, often with slightly different qualifications for what makes a safe driver.
Although the figures vary by state, about 10% to 20% of customers choose to use safe-driver programs such as these.
Many of the programs claim to provide a discount of up to 10% on insurance premiums for signing up to use the program. As driving habits are tracked over time, additional discounts can be awarded to safe drivers. Sometimes though this tracking can also lead to increased rates. This is especially true if driving habits show patterns that THEY considered high risk.
How They Work
To use telematic technology to track driving habits, many insurance companies require using an app on your smartphone. It tracks your driving performance in real time, using location services or Bluetooth.
Outside of an app, some insurance companies require a device that is plugged directly into your vehicle’s computer to track every detail of your driving habits. The device is plugged in near your steering wheel, to the OBD-II diagnostic port.
In either case, a GPS signal is used to track movement, along with an accelerometer, gyroscope, and magnetometer. Some companies use General Motors’ OnStar to track driving habits.
When using a smartphone app, you can view your driving data. Any time the app detects the motion of a vehicle, it will begin tracking. There are limited options to put the tracker on sleep mode, if you can remember to, when another person is driving, for example. You’ll also view demerits against your driving record and see behaviors such as how often you use your phone while driving.
What They Track and Why it Puts You at Risk
Insurance driving apps track various real-time data related to how, when, and where you’re driving. The apps monitor habits that could include:
- The speed you drive
- Hard or sudden braking and accelerating
- Driving between 12 to 4 a.m. on weekends
- The number of miles you drive
- Use of your phone while driving
Drivers should consider what information is being tracked and how it may be used by insurance companies. Beyond analyzing daily driving habits to determine eligibility for discounts, many insurance companies use the data for underwriting purposes, when considering claims, and for development and research purposes. Drivers should read insurer’s privacy policies and terms and use for more detail about what is being tracked.
The lack of regulation though makes drivers vulnerable to having their data used inappropriately.
If you were in an auto accident for example, your data would likely be analyzed and could be used against you in an accident. The problem is that these apps don’t have all of the information, such as the other driver’s data. An insurance company could claim that you were at fault for the accident, based on the movements of your vehicle.
These apps put more power in the hands of the underwriters to determine the standards for what makes safe driving.
The data will likely be considered when determining how much the driver will be awarded after filing a claim. Insurance companies could use the data against you to prevent you from receiving coverage you deserve.
If an auto accident results in a lawsuit, the data may be required to be shared in court. It could discredit your case and give credibility to one driver in a liability dispute, for example.
Many newer vehicles already have an Event Data Recorder, or a black box that automatically records this data, which law enforcement can gain access to. Insurance apps, however, also make that data more readily available to insurance companies and anyone they may be sharing it with.
Some automakers even present access to this data as a selling point. Tesla launched Autopilot insurance coverage last year, where drivers opt in to their insurance coverage being directly tied to the data on their vehicle’s black box.
This could create a slippery slope regarding how your data is used. At what point will it be required that your data is shared between insurers, making it difficult for you to get a new, affordable policy? How long will the information from the app follow you? Will employers begin asking for this information before hiring? These are just some of the concerns many have about sharing their personal or household driving data.
Frost & Remer Advantage
If you want to protect your data and avoid having to meet the insurer’s criteria for good driving, there are other ways to get discounts for being a safe driver.
Frost & Remer won’t literally track your driving habits but does offer a good driving discount on auto insurance policies, among other discounts and bundles options.
Schedule a virtual appointment to discuss your current auto insurance policy or start a new one.
Photo by Stefan Rodriguez on Unsplash