Sacrifice Your Privacy To Get Cheap Auto Insurance Rates

Usage-based auto insurance could save you a lot of money on your car insurance costs, making it worth it to sacrifice your privacy for cheap auto insurance rates. If you agree to have your driving habits tracked by your insurance company, and you're a good driver, you can use this usage-based auto insurance to lower your rates. Not comfortable with sacrificing your privacy? You can still get cheap auto insurance quotes when you comparison shop online. Get started with our free quote comparison tool below.

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Rachel Bodine graduated from college with a BA in English. She has since worked as a Feature Writer in the insurance industry and gained a deep knowledge of state and countrywide insurance laws and rates. Her research and writing focus on helping readers understand their insurance coverage and how to find savings. Her expert advice on insurance has been featured on sites like PhotoEnforced, All...

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Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products including home, life, auto, and commercial and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, largely in the insurance...

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Reviewed by Leslie Kasperowicz
Farmers CSR for 4 Years

UPDATED: May 3, 2021

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There is a new way to save at most major auto insurance companies: Let them keep tabs on every single second of your driving time in exchange for a yearly discount that can go into the hundreds of dollars if you drive well enough.

It’s a win-win situation. Three of the nation’s major auto insurance companies are pursuing this policy extremely aggressively – State Farm, Allstate, and Progressive. Other smaller companies are expected to follow suit. The idea is to attract drivers who do not wreck their cars as often. Customers who want to take advantage of this interesting program can pay premiums that correlate to how they drive, versus how old they are, what gender they are, and their credit history (things of that nature). A statistical approximation based on factors outside of your control is the norm, but this special program can complement it.

The program is referred to as usage-based insurance, and it comes up with loads and loads of data. While auto insurance companies are saying that they will keep the data to themselves right now, some analysts think that we are just a couple years away from companies’ putting whole driver histories into a major industry database. At that point, everyone would have a driver score just like the numbers that FICO uses to help creditors out, and that number would follow us around whenever we went shopping for a new car insurance policy.

No one is really sure exactly when that day will come, but it might depend on how many people take advantage of the program. We have all heard that a frog put into warm water that is slowly heated will not know that it is eventually boiling. That same adage applies here, with a twist. People will get more comfortable with having their driving rated, and before we know it, there could be a central industry database. The twist is that that is not a bad thing. Good drivers should be rewarded for their good driving, instead of having to pay more just because of a statistical approximation.

What Does A Typical Driving Report Card Look Like?

OK, so you get the gist of the usage-based driving program. How is it evaluated though? What factors are looked at? What does a driving report card look like?

Categories like acceleration, deceleration, turns, time of day, and speed are evaluated.

If you take advantage of the program, you will probably get a device that you can plug into a little port behind the steering wheel. That is all you need to get started. The machine will then transmit data wirelessly back to the company. Pretty cool, huh?

You will get regular report cards about your driving behavior. Your grades in the aforementioned categories will range from A to C. The company declined to flunk anyone since they did not want to make anyone sad. The grades then get plugged into a formula that will determine discounts.

An above-average score on a report card might get you an annual discount of over 20%.

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Right now, the major companies involved in the company are not penalizing people who sign up and end up being terrible drivers. Participation is completely voluntary, and nearly 15% of customers at Progressive have enrolled already.

However, as more people sign up, the current rate will begin to feel like a penalty for people who do not want to participate. If every good driver participates in the program and qualifies for a lower price, the companies could eventually raise rates on people who are not participating yet. There is one feature that parents will like: You can usually your insurer’s data to monitor the driving of your teenager.

Why would someone not want to participate in the program?

The first reason is that not every insurance company has a version of the program yet.

The second reason is privacy. Who wants a big company to know every single thing about where they go and how they drive? Even though the major companies are not yet tracking exact locations, they want to, and Progressive is currently testing it. For example, a mile driving on a highway is a lot safer than a mile driving on a street. A lot of customers are already asking Progressive to track them this way.

For people with privacy concerns, it is hard to make a good case for usage-based insurance. If you care more about saving money than you do about privacy, and you are a good driver to boot, then you should love a program like this.

Still, some are worried about a driver score. The major companies involved in usage-based insurance say they do not want anything to do with that.

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