The High Privacy Price of Auto Insurance Monitoring Discounts

A recent report in The Wall Street Journal sheds light on a new “Big Brother.” Some of the largest automobile insurance companies are now using driving data obtained from GPS and other devices to create preferred pricing for those who submit real-time driving data that demonstrate their good driving habits and low risk.

So, if drivers travel at the speed limit, don’t make erratic turns, and go short distances, they may get discounts of as much as 30-50 percent. The economics may be very attractive.

However the of loss of personal privacy may be an unintended effect of immense proportions.

How It Works

Progressive Insurance calls its program “pay-as-you-drive,” and State Farm Insurance’s program is “Drive Safe and Save.” Here is how it works: Insureds permit devices to be installed in their vehicles, or allow insurance companies access to data from onboard GPS devices such as General Motor’s OnStar and Ford’s telematics.

Progressive, for example, provides a small digital device that plugs into the car’s diagnostic port, usually located on the lower edge of the dashboard. The device chirps when the car is driven outside Progressive’s range of acceptability (whatever that may be), and while monitoring speed, as well as of length of time at certain speeds. This information is transmitted to the company and can be taken into account at rate-setting time.

What Are the Privacy Issues?

Data about location and driving habits speak volumes about drivers’ personal and private lives.While some individuals do not care a great deal, perhaps they should consider how this data may be used in the future — whether by the government in a criminal case or a spouse in a divorce lawsuit.

The main issue is around the data collected and the data actually used. There may be some differences in such information depending on the technology employed.

Progressive, which uses the digital device referenced above, states in its Privacy Policy that it does notcollect GPS data about the location of the drivers:Data We Don’t Collect

Snapshot focuses on how safely, how often, how far, and when you drive, NOT where you drive.The Snapshot device does not contain GPS technology and does not track vehicle location orwhether you’re exceeding the speed limit. We also don’t know who is driving the car in whichthe device is installed.

Keep in mind that that even without these devices, there are other ways to obtain location data. If a driver keeps a cellphone on while in the car, the cellphone leaves behind a GPS trail, andcollectively the time, usage, and GPS data could be significant information in a later divorce or criminal proceeding.

Many auto manufacturers provide and use onboard systems, such as the OnStar and telematics devices.Data from those devices monitor vehicle performance and provide diagnostics of vehicle systems. GPSdata helps locate vehicles that have broken down and assists drivers in accidents. That data can be usedfor insurance purposes, as noted above.

What happens if the driver cancels the service for any reason, including not wanting to pay for it? The natural expectation would be that the monitoring would cease, but that may not be so.Effective December 2011, the OnStar GPS navigation and emergency services company continued tocollect vehicle data from customers who terminated their agreements. That happened because terminating the service and deactivating the device are separate processes.

The 10-page OnStar Privacy Statement includes the following provision: Unless the Data Connection to your Vehicle is deactivated, data about your Vehicle willcontinue to be collected even if you do not have a Plan. It is important that you convey this toother drivers, occupants, or subsequent owners of your Vehicle. You may deactivate the DataConnection to your Vehicle at any time by contacting an OnStar Advisor.In addition to GPS location data collected, the Privacy Statement goes on to specify additionalinformation OnStar collects:

• your contact information, (including your name, address, telephone number and email address);
• your billing information (including your credit card number);
• information about the purchase or lease of your Vehicle, such as the vehicle identificationnumber (VIN), make, model, year and date of purchase or lease and selling/preferred dealer;and
• other information that you voluntarily provide to us (such as your language preference, yourlicense plate number and/or your emergency contact information).

Most people to do not understand that their privacy is at stake with these devices.

Can Device Data Be Used in Court?

Maybe — it’s not always clear. As I discussed in my column entitled “GPS, Privacy and the SupremeCourt,” GPS data is now widespread in divorce proceedings. However, without a warrant, GPS data is unlikely to be used in criminal courts after the October 2011 U.S. Supreme Court ruling in U.S. v. Jones, but now more police may get warrants to track alleged criminals by GPS in their cell devices and autos.

Just look at Progressive’s Snapshot Privacy Policy, which clearly states that the data collected will beprovided in civil litigation and to the police:When We May Disclose the Data to Others

We will not share Snapshot data with any third parties unless it’s necessary or appropriate toservice your insurance policy, prevent fraud, perform research, or comply with the law. Forexample, Snapshot data may be disclosed:

• when we’re legally required to provide Snapshot data, such as in response to asubpoena in a civil lawsuit or by police when investigating the cause of an accident;
• when we’re required to provide Snapshot data to a state department of insurance tosupport renewal rates;
• to service providers who are contractually required to maintain its confidentiality; and/or
• as otherwise required by law.

While Progressive’s Snapshot does not capture GPS location data, OnStar and telematics do collect it, and as a result, the exact location of people — think spouse location on a specific date and timein a divorce case — would be available with a subpoena.

OnStar’s terms of service specifically state that OnStar collects data about the vehicle’s use and location:The information we may get from your Car includes things such as: data about its operation;data about your use of the OnStar Services; the location of your Car…Clearly, if subpoenaed, the OnStar data could be evidence of location and perhaps other information,including how fast someone was going before an accident.

Some Conclusions

Maybe people just don’t care about the privacy of their whereabouts any longer, given that their smartphones provide location, and their location is already being monitored.

But if ever the GPS or otherdevice data hurt them in the courtroom, they will surely regret the day they gave up their privacy.