Pay as you drive programs, also known as usage based insurance plans, are rapidly increasing in their popularity and use a wireless device installed in the car to allow the insurer to track the actual driving behaviors of the individual so that he or she can receive discounts based on safe habits.
The usage based insurance study was conducted by a team of research from the University of Denver, Colorado. What they discovered was that the type of data that is collected by these devices, such as the number of miles that a person drives, the time that the individual travels, speeding habits, hard braking and rapid acceleration, can all create a surprisingly detailed picture of the movements that a person makes within a certain period of time.
Usage based insurance companies have pointed out that no location based data is collected.
However, according to the report that was based on the study findings, this presents only a false sense of security for registration into usage based insurance programs. The title of the study was “Inferring Trip Destinations From Driving Habits Data”. What it indicated was that “Customer privacy expectations in non-tracking telematics applications need to be reset, and new policies need to be implemented to inform customers of possible risk.”
With usage based insurance, the insurers will generally add a small telematics device to the onboard diagnostics port of the applicable vehicle. That device takes in data regarding certain types of driving behaviors and sends them to the insurer. Although the insurer uses that information to gauge how safe a driver is on the road and to determine his or her risk level for coverage, the researchers have also said that when the information is all put together it can paint a very clear picture of what a person does every day.
The National Association of Insurance Commissioners has predicted that 20 percent of all auto coverage in the United States will involve some kind of usage based insurance over the span of the next five years.
