An ad popped up in my feed the other day for auto insurance.  It offered the possibility of lower rates if I plugged a tracking device like this in my car to monitor my driving habits.

I knew these things existed.  I had even asked my insurance agent about them. Major insurance companies like AllState and Progressive have this device.  At this point in time, if these devices indicate you are a safe driver, you will get a discount (the actual size of these discounts is up for debate).  What happens when it might go the other way too?

Once I understood how Telematics devices work, I decided the potential invasion of my privacy was not worth a possible (but not guaranteed) reduction in my insurance rate.  It was not likely to help me because, at the time, the majority of my driving was at night as I taught night classes 30 miles away from home. As for what they are tracking, I think the major factors are: the time of day you drive and your mileage, as well as how many times you hit the brakes hard and I would guess, your speed.

I have also seen advertisements targeted at parents of teens for a product that monitors their teen’s driving.  The device tracks similar metrics but also tracks location to give parents “peace of mind.”  (You can’t say you are going to Jenny’s and then go to John’s house instead.) These devices apparently collect data that parents can review with their kids with the intention of using them as a learning tool (and not just for stalking.)  

Because of the nature of insurance, the good drivers (or drivers that prove to be good/lucky) subsidize those that aren’t as good or lucky, much like healthy people who buy health insurance subsidize those who are less so.  Insurance prices are determined by statistics.  Some of the determining factors are out of your control, like your age and gender.  (Younger male drivers have more accidents; so all male teen drivers pay more for insurance.)  But some factors are potentially within your control, like where you live, how much you drive, what car you drive [NGPF Question of the Day asks whether car color matters], how well you drive, and in most states, your credit score.  (There is a high negative correlation between credit score and auto insurance claims, which is how auto insurers justify the price discrimination.)

Nerdwallet gives a few tips at getting a better deal on auto insurance for teens [NGPF QoD on how much the average premium rises for adding a teen to the policy].  Getting good grades and taking driver’s education usually get you a discount.  It is usually cheapest for teens to be added to their parent’s insurance, rather than getting their own coverage.  While parents might not want the potential invasion of privacy for themselves, I am guessing they would be more likely to agree to install a device in the car the teen drives if it meant lower rates.  Teens themselves, especially once they are paying for their own insurance, might be OK with it also…..after all, the apps on their phone already make their location, among other things, fairly easy to trace.  The device might help them prove that they are safe drivers.

Drivers of all ages might benefit from examining their car habits.  Many things besides texting cause us to be distracted drivers, and not all of them are obvious.  Geico has a great article on the subject that might teach us all a few things.

Teens aren’t alone here; they may have something in common with their grandparents!  These devices can be put in their grandparents’ cars as well if their parents want to make sure they are still capable of driving safely!!! Of course, when autonomous vehicles become more prevalent, we will have a different set of worries...

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For more auto insurance activities, check out these from the NGPF Activity Bank:

• Interactive: Auto Insurance Comparison Shopping
• Read: A Car Insurance Policy
• Roleplay: Complete A Car Insurance Claim

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