The Promise and the Risk of Tracking Software and Dash Cams with Car Insurance
These devices may help after an accident, but they also are remarkably intrusive and unregulated
Insurance rates were once dependent on the aggregated risk that was presented by certain demographic groups. Young males were known to have a higher risk of a car accident than older women, and paid higher rates. This system was not perfect, as it could penalize those with good driving habits and benefit some, at least, until they had an accident, who may have engaged in riskier behavior.
The granular future
Because of inexpensive technology, this may change. Today, with cell phones and other data monitors, an insurer can track the individual activity of policyholders and tying that activity to claims, determine rates based on highly individualized behavior.
The benefit to policyholders is to provide some of them with lower rates. The downside is the insurer obtains a frighteningly detailed view into your life.
Some insurers are offering tracking devices that are installed in your vehicle and provide precise data on your driving behavior. One insurer has used data from millions of its customers to conclude that hard braking is closely linked to accidents.
This may be intuitive, but how the company analyzes the data is important. How carefully they distinguish truly risky behavior will matter, and if you are classified as being one of those risky drivers, you are likely to pay higher rates for your insurance.
The information gleaned by these systems may benefit the insurer in terms of better allocation of risk. However, it also permits those companies to construct very large databases on customer activity with little regulation on their use of that information.
Another device that could affect your insurance is a dash camera. This is a small camera that is mounted in your windshield that typically records on a loop your driving time. It could provide video evidence that a driver cut you off and caused a crash.
These devices have been widely adopted in some European nations, but have yet to become widespread in this country. Insurers, likewise, appear to have no uniform policy on accepting video from these devices, but as they develop more experience with them, it may lead to greater acceptance.
At this time, it appears that the evidence they provide is generally not overwhelmingly conclusive in many crashes, but they are likely to be better than no evidence at all. In some cases, they may eliminate some he-said-she-said disputes over what happened at the time of a crash.
Quality of the picture and field-of-view can influence the usefulness of the video and for them to be helpful, it is important that they show what happened in the seconds prior to the collision. Typically they are mounted to capture the view out of the front window, but some drivers also mount them rear facing, but that is less common.
The recording all of your movement and/or tracking all of your driving activity creates privacy concerns. Many drivers do not trust their insurers sufficiently to allow them to collect this data. Absent strict legal controls, these companies have no restrictions on how they gather this information or how they use it.
Of course, there are other privacy concerns. If the device records sound or the interior of the passenger compartment, you may need to make certain your passengers consent to the recording, as it could violate some state privacy laws.
It seems likely that insurers are going to desire to obtain ever more detailed information on their customers. Some of that may be done by the carrot of pricing discounts, while there is always the possibility of insurers using their economic power to obtain legislative blessing to make these systems mandatory.
On the other hand, should autonomous vehicle become an actuality, car insurance may become as old-fashioned as a wired telephone, provided we do not mind transport systems knowing where we are at every instant.