- The Washington Times - Thursday, January 22, 2015

Drivers seeking cheaper insurance premiums may be tempted to enroll in a usage-based program that monitors driving behavior, but privacy analysts caution that customers should consider the implications before signing the dotted line.

Privacy advocates say proof of good driving — gleaned from monitoring for miles driven, speeds, braking and GPS locations — may not be worth the premium discounts.

Insurers could make the information available to law enforcement, give it to attorneys involved in private lawsuits such as divorces or use it in a variety of other unacknowledged ways.

“Customers should be aware that this is a trade of information, it’s location information that is very useful for assembling inferences about how you live your life,” said Jim Harper, a founding member of the Department of Homeland Security’s Data Privacy and Integrity Advisory Committee and a senior fellow at the Cato Institute.

“People can use the data to figure out who you hang out with, what church you go to, what psychologist you are seeing,” Mr. Harper said.



The level of monitoring and the exact process vary among insurers.

Progressive tracks only mileage, how often a car is driven and braking habits. Other companies such as Allstate have programs that track trip routes and locations, along with other driving habits. Most companies require drivers to remain in the program for a minimum of six months to receive discounts.

The insurance companies use this information to give them records of good and bad drivers so they can better target their rates, and in some cases use it to advertise.

Privacy advocates are concerned that insurers will use the data for marketing and possibly nefarious purposes.

“They would be tracking you every hour of the day and night that you are using your car,” said Claude Barfield, a visiting scholar at the American Enterprise Institute. “They could determine anything from somebody is cheating on his wife to the cause of an accident.”

Mr. Harper said the same theory that lets the National Security Agency gather information on Americans — that once you share information with someone it becomes less private — applies to usage-based insurance programs.

“The third-party doctrine says when you’ve handed information over to a third party then you don’t have a claim on that information anymore,” he said.

If you do opt in to one of these policies, be sure to know the culture of the company, Mr. Harper said.

Almost all companies will turn over data to law enforcement for investigations, but some will guard their customers’ information more closely and require law enforcement to follow all the legal rules before releasing information, he said.

“If you pay attention, you can pick up whether the culture in the company is one you want to work with,” Mr. Harper said.

In addition to discussing a company’s privacy policies, drivers also should consider why an insurance provider would want to track its customers.

“The company in a sense is bribing its customers,” Mr. Barfield said.

He questioned what a well-respected insurer would gain from acquiring the information and said the privacy risks for the customer don’t justify the benefits.

“I wouldn’t do it,” he said. “I can understand if I was getting a 50 percent discount it would be more tempting. If I have an accident — which is what the company should care about — or if I’m pulled over for drunken driving then that’s part of the public record. You have to tell your company that or they can find it out. Given the fact that that’s all they really need to know, I don’t know why I would disclose other information.”

But Cato’s Mr. Harper argues that it’s a matter of consumer choice and said he probably would enroll if the discount was large enough.

“It’s a real trade-off, and it’s definitely sometimes to your benefit to trade personal information,” he said. “If I was only going to get a dollar off, probably not, but if I was going to get a 25 percent discount, heck yes.”

Representatives from Progressive, State Farm and Allstate — which all offer some form of usage-based insurance discounts — declined to comment beyond pointing to their respective companies’ privacy policies.

Progressive’s privacy policy states that the company may share “de-personalized” information from its program more broadly, meaning it could use a driver’s statistics for advertising so long as the driver is not identified.

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