It was an offer Roger Blaine could not resist.
“I decided to do it really for the savings,” he said.
The option to sign up for usage-based car insurance with the hope of saving 20 to 30 percent off the $2,500 he was paying yearly on premiums. He said the program allows his insurance carrier to monitor his driving habits, including accelerations, braking, speed and phone use and then uses the data to provide a score.
“This last trip it gave me a rating of 5 stars,” he said.
If his score indicates low-risk driving, his premiums could be reduced significantly.
“I think this gives an extra impetus to really follow speed limits,” he said.
The idea of saving money has more consumers deciding to opt-in, as a number of major insurance companies are offering their own versions of usage-based programs.
“There’s a lot of enticement here for consumers,” said Professor Anthony Miyazaki, Executive Director for Marketing and Analytics at FIU’s Business school.
Professor Miyazaki said while these programs may sound appealing, consumers should make sure they understand what they’re signing up for.
“There could be insurance companies and insurance agents that are really honest in trying to help you, but then it turns out that perhaps you don’t drive as well as you think you do or as well as they think you do and now … your rates go up because you’ve got these bad driving habits,” he said.
There are also privacy considerations to having a device tracking you every day.
“Now someone actually has all your data about where you drive and where you go and where you live and where you work,” he said. “And it’s not just an app or a navigation software that has this, but it’s actually someone you’re doing business with.”
Roger, meanwhile, said he was OK with that as long as it meant more cash in his pocket.
“I don’t have a problem with that,” he said. “The fact that I can save money by being watched is acceptable.”
If you decide to sign up for one of these programs, Professor Miyazaki said you should take the time to read the fine print and see if you’re agreeing to allow the company to sell or share the data it collects from you.
You’ll also want to make sure you ask questions about the types of data that will be gathered and how this information may be used.