|Commentary authored by Gardere Attorney Peter Vogel and published in the E-Commerce Times |
The High Privacy Price of Auto Insurance Monitoring Discounts
|July 11, 2012 11:59 pm|
By Peter S. Vogel is a trial partner at Gardere Wynne Sewell, where he is chair of the eDiscovery Team and Chair of the Technology Industry Team. Before practicing law, he was a systems programmer on mainframes, received a masters in computer science, and taught graduate courses in information systems and operations research. His blog covers contemporary technology topics.
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.
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 other device data hurt them in the courtroom, they will surely regret the day they gave up their privacy.
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