Who could complain about insurance companies that let consumers choose?
Auto insurers have started offering discounts to drivers who agree to install tracking devices in their cars to tell the insurance company when, where, and how they're driving. These devices put your insurance company in the passenger seat, taking notes every time you turn, brake or accelerate. They can record time of day, how fast, and the places you drive, and send all that data back to the insurer. The insurer gives a discount to people they decide are good drivers.
Today's USA Today editorial page concluded that, as long as tracking is voluntary, we can let insurance companies do whatever they please. The only problem is, it’s not voluntary at all. Drivers pay a higher price if they reject being spied on and choose not to be tracked. A choice between lower-cost auto insurance and protecting your privacy is no choice at all.
There is a way to do pay-as-you-drive insurance that makes sense. Base insurance premiums in part on the number of miles a person drives per year. Reduce your mileage, reduce your premium. This can be done by simply reporting to your insurance company the readings on a device that's already in your car tracking your mileage – the odometer. I get a big discount on my own insurance this way, because my 7 block walking commute means I drive less than 7500 miles a year. Consumers with State Farm's new pay as you drive policies in California, Illinois, Ohio and Texas have an even better option, with the possibility of discounts for every 500 mile reduction in driving they can show per year.
What insurance companies like to call “usage-based” insurance is far more intrusive. It involves unnecessary tracking of as much information as the insurer can convince the driver to give up. Most, if not all, of those factors have nothing to do with whether or not you’re safe behind the wheel. For instance, Progressive’s Snapshot program penalizes drivers for being on the road between the hours of 12 midnight and 4 am. But does working the night shift at the factory, or the radio station, mean I’m necessarily a bad driver? No it does not.
Besides, we don't need tracking to reward good drivers. Every insurance company in America already bases your auto insurance rates on your driving record. Drivers pay more for having speeding tickets, accidents or DUIs.
And this kind of tracking opens the door to even more invasion of privacy, and the discriminatory pricing that will follow. Insurance companies in most states already make where you live the most important factor in determining what you pay for insurance. (California is the rare exception.) With location data at their fingertips, how long will it be before insurance companies start pricing based on where you drive too? Work at a homeless shelter on Skid Row? It won't be long before your insurer dings you for helping people. Charging people more for their insurance because they don't live and work in a rich suburb is the modern day version of redlining.
And, as the USA Today counterpoint by the privacy advocates at EPIC noted, one use of insurance data is already widespread — access by government and law enforcement. If the data is collected, the government wants access to it, and in this age of eroding civil liberties in the name of fighting terrorism, the only private information that’s safe is the information that’s never collected in the first place.
Auto insurance isn't a choice for most Amercians. Unless we're lucky enough to live in a transit-friendly city, we must drive to get to school, go to work and conduct every other part of our lives. If we drive, we are legally required to carry insurance. Giving up our privacy should not be a pre-condition of following the law and getting a fair insurance rate.
I love choices. But I have no choice at all if I have to pay more for auto insurance to protect my privacy.