Everyone needs car insurance. No one wants to pay more than they have to, especially for more coverage than they need. So if your insurance company comes out with a new way to monitor the miles you put on your car, and how safely you roll through your odometer, it seems like you’d be smart to sign up. Right?
In short: no. Sure, you can save a few bucks a month by proving to your insurance agency that you’re a careful, safe driver. As we saw with Tesla’s Safety Score, however, the definition of “safe” is hard to quantify in a data-driven vacuum.
Traditional insurance costs come from the type of car you drive, your mileage per year, where you live, your credit score — vague data points, tangentially (at best) related to your actual likelihood of being involved in an accident. Insurers essentially work from stereotypes: Every long-haul driver is a high risk, every coupe driver is a street racer.
Telematics, by contrast, give a more detailed view of how a unique driver actually operates out on the road. In theory, a driver with a history of hard launches and sudden stops is a less safe driver than one who eases onto the gas and brakes lightly. Consumer Reports examined telematics programs from ten different insurers, and found that they track the following metrics:
Theoretically, having these data points that are directly tied to one’s driving habits would make for a more accurate insurance estimate. The problem lies with how the data is examined, and the lack of any context with which to interpret it.
None of these (okay, maybe phone use or truly excessive speeds) will singlehandedly lead to an accident. In some contexts they can, like a road rage-fueled brake check, but that hard stop registered by your insurer’s software could just as easily be proper avoidance of someone blindly backing out of a parking spot.
While it’s not exactly the same issue plaguing autonomous vehicle development, it’s a very similar concept: real-world driving has too many factors to properly judge from limited data.
That data, of course, is a risk in and of itself. Insurance agencies can be prime targets for security breaches, and any kind of data could be incredibly dangerous in the wrong hands. While it’s unlikely (although not out of the question) that this information includes GPS data, insurers need a vehicle’s home address on file. Combine that with the data on “when this car is out and about,” and you have detailed timeframes about when a home is vacant — all available to prospective ne’er-do-wells.
Insurer telematics offer an enticing hook: the ability to pay less in insurance if you drive safely. In exchange, you risk higher fees (or claim denials) in exchange for that same safe driving, as well as your personal safety in the all-too-likely event of a breach.
I can’t tell you what to do with your money, but I’ll be sticking with my own flat insurance rate.