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If You Want Cheap Car Insurance, You Might Have to Sacrifice Your Privacy

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fter six years of living in Europe without a car, I recently decided to get behind the wheel again when I moved to Canada. My partner and I bought a used Hyundai and then went shopping for car insurance. We were surprised to find that premiums in Ontario, where we live, are outrageously expensive — hundreds of dollars a month. And we were even more surprised to find that almost every insurance company offered us a solution to these high premiums: an app.

The app monitors your driving and assigns a “save driving score.” If you drive more safely, the insurance companies insist, they can offer you a higher discount — up to 20% off on the premium every year. For insurance companies, apps like these are part of a trend toward underwriting based on behavior, not just demographics. As explained a Deloitte report on the topic:

“Current rating methods would likely rate two drivers identically if they had the same credit scores, automobiles, and demographics and lived in areas with similar geographic profiles. However, what if we knew through telematics observation that one of the insured persons drives his/her car one-tenth as much as the other, or at less risky times of the day? In that case, an insurer would be in a position to potentially leverage this new experiential information and underwrite the respective risks posed by the two drivers differently, as well as price their coverage more accurately.”

The problem for consumers? These apps are constantly monitoring your phone’s location and motion sensors, sending that data off to the company’s servers, and opaquely calculating that safe driving score. If you don’t grant these apps background location access — permission to track you at any time, even when the app isn’t open — many of them don’t function properly, and you’re unlikely to get a discount.

It’s a literal trade between my privacy, or having to shell out hundreds of dollars a year.

Almost every insurance company in Canada provides one of these apps and provides a small discount for just installing it. In the U.S., insurance companies such as State Farm and Progressive offer the same deal. Even Europe, famous for protecting citizen privacy, isn’t immune, with AIG offering a similar scheme.

My insurer, TD Insurance, provides an app called MyAdvantage, which must be installed on every registered driver’s phone within seven days, and provided with location access. It automatically attempts to detect when you’re driving, then offers up a score for braking, acceleration, speeding, and cornering when you’re done — as well as detailed location data tracking your route along the way.

According to my insurer’s FAQ about the app, a broad swath of data is sent from your phone to the company’s servers, including GPS data, distance traveled, accelerometer access, time of day, app usage data, unique device IDs, battery status, and connection details for both Bluetooth and Wi-Fi. It’s unclear how long the company keeps that data or whether it has a policy for deleting it, as the FAQ doesn’t detail data practices outside of saying the data is “securely transmitted” to its servers.

Not only is this data collection broad, but it’s difficult to refuse: If I didn’t use the app, insurance would cost $60–$100 more per month. It’s a literal trade between my privacy or having to shell out hundreds of dollars a year.

Installing an app like this on my own phone was out of the question, so I installed it on an older phone I had lying around, which I keep in my car and only turn on when I’m driving. This way, I can at least prevent the company from following me around when I’m not driving.

At the end of each trip, I’m offered a score and “handy tips” to drive better. The company’s algorithm seems incredibly harsh. On one trip, I braked hard to avoid running a yellow light, so the app rated me 40/100 for braking, and told me to brake smoother. I’m constantly scared of going even a few kilometers over the speed limit, as it’ll punish me in a similar way.

The company’s FAQ says that it understands that situations that incur low scores are sometimes unavoidable, so the scores are averaged over the entire year — allowing you to make up for harsh ratings over time. But driving is unpredictable, and the way the app makes these calculations is opaque.

Other users of the MyAdvantage app feel the same way — on the Apple App Store, the average review score is just 1.7 stars. One reviewer said that “using this app you lose their points if you drive 1 kilometer over a speed limit” and that “grandma used this app and the app rated her driving reckless.”

It’s unlikely most people understand these privacy implications or realize how much data they’re giving up. And they likely don’t realize that the same data could be used against them to raise rates for the most “risky” of customers.

The authors of the Deloitte report on “telematics” apps for car insurance surveyed more than 2,000 people about whether or not they’d use such an app. A quarter of them said they would allow such monitoring “without stipulating any specific minimum discount in return,” but almost half of respondents said they would not accept monitoring, even in return for a discount. I almost surely would have answered that way in a survey. Using an app like this, even on a burner phone, makes me deeply uneasy. But the promised discount is just too compelling when rates are so high, and when presented with the option in real life, I took it.

The car insurance industry isn’t the only one using technology to track customers. Health companies have dabbled with offering free wearables, providing them with constant access to your vitals in exchange for a modest discount. If this trend continues, insurers will know everything about our lives, from the time we go to sleep to the places we go during the day.

I’m afraid that the company will somehow punish me for a single mistake because it can follow my every move.

For now, insurance companies like my own claim that the data is only used for creating a driving score, but it’s hard to believe that’ll last forever. The temptation to crunch that dataset for the places I go and the people I see will eventually prove too tempting, and consumers, needing the discount on their insurance, simply can’t refuse.

Before buying a car this time around, I’d assumed technology would make my relationship with insurance companies better somehow. Instead, the reality is that I feel like I’m being constantly monitored for bad behavior, and I’m afraid that the company will somehow punish me for a single mistake, with no recourse whatsoever, because it can follow my every move.

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