Car Insurance - The Issue of Telematics and Privacy
Insurance is all about risk. Insurance companies evaluate the level of risk and then set premium rates and coverage per the measurement in question. As you can imagine, they like to limit risk whenever possible. Telematics are a new and controversial method for doing it.
What do insurers want to know the most about drivers? The want to know what kind of driver they are. Do they drive the speed limit or race around town? Do they gun it when they see a yellow light or slow down and stop? An insurance company really has no way of knowing. A few are trying to change that.
A number of car insurance companies like Travelers and Progressive are testing drive monitors. These gadgets, often called telematics, are plugged into the diagnostic electronics of the car. Roughly the size of an iPhone, the devices record basic things like the time you drove, how far you went and other practical data. The data is then sent back to the insurance company through cell phone towers. Basic calculations can then be used to determine if you were being a driver who was more or less likely to get into an accident.
The concept of privacy has more or less become a joke these days. Many feel that telematics are another nail in the coffin of privacy. Insurance companies make no bones about it, either. There is no privacy. They are not looking at overall data for all drivers. They are looking at YOUR driving patterns so they can set your rates or even cancel your policy if you don't meet there risk requirements.
So, how might telematics be used to evaluate someone? Well, let's assume you work in the restaurant industry. You're a cook. You cook till 11:00 and then have to go through the clean up and prep for the next morning. You usually get out of the restaurant around midnight and it takes you 20 minutes to drive home.
The telematics device in your car would send data back to the insurance company. A computer program would do an initial analysis. What would it find? The most obvious is that you are driving after midnight. This dramatically increases the probability of risk because the highest frequency of crashes happen between midnight and four in the morning. This is obviously due to people drinking. You weren't drinking, but it won't matter. Your rates are going up!
Telematics are currently being tested in multiple states. There is no legal requirement they be used, but we are heading down a slippery slope. This raises the question again of just how much are we willing to let our lives be regulated and controlled? Only time will tell.
What do insurers want to know the most about drivers? The want to know what kind of driver they are. Do they drive the speed limit or race around town? Do they gun it when they see a yellow light or slow down and stop? An insurance company really has no way of knowing. A few are trying to change that.
A number of car insurance companies like Travelers and Progressive are testing drive monitors. These gadgets, often called telematics, are plugged into the diagnostic electronics of the car. Roughly the size of an iPhone, the devices record basic things like the time you drove, how far you went and other practical data. The data is then sent back to the insurance company through cell phone towers. Basic calculations can then be used to determine if you were being a driver who was more or less likely to get into an accident.
The concept of privacy has more or less become a joke these days. Many feel that telematics are another nail in the coffin of privacy. Insurance companies make no bones about it, either. There is no privacy. They are not looking at overall data for all drivers. They are looking at YOUR driving patterns so they can set your rates or even cancel your policy if you don't meet there risk requirements.
So, how might telematics be used to evaluate someone? Well, let's assume you work in the restaurant industry. You're a cook. You cook till 11:00 and then have to go through the clean up and prep for the next morning. You usually get out of the restaurant around midnight and it takes you 20 minutes to drive home.
The telematics device in your car would send data back to the insurance company. A computer program would do an initial analysis. What would it find? The most obvious is that you are driving after midnight. This dramatically increases the probability of risk because the highest frequency of crashes happen between midnight and four in the morning. This is obviously due to people drinking. You weren't drinking, but it won't matter. Your rates are going up!
Telematics are currently being tested in multiple states. There is no legal requirement they be used, but we are heading down a slippery slope. This raises the question again of just how much are we willing to let our lives be regulated and controlled? Only time will tell.