We’ve all seen the Allstate Insurance television commercial with their spoke person sitting in an armchair in the middle of a city intersection advocating for “Drivewise.” Drivewise is an app created by the Allstate to track a person’s driving. Almost every major car insurance company is advertising its driving app. A customer can download and let the app track his every move in exchange for auto insurance premium discounts.
Allstate claims that Drivewise will “drive down your insurance costs.” State Farm says that their “Drive Safe & Save” app will “put you in control of your discount.” Other companies will give a steep discount simply for downloading the app. For example, Nationwide offers a 10% discount for signing up and American Family Insurance offers up to a 40% discount for downloading “KnowYourDrive.”
The car insurance industry is aggressively pushing customers to download driving applications. Insurance companies claim the applications help us drive safer. We hear a lot about the discounts, but almost nothing about what we give up for downloading these applications and letting insurance companies and big business track our every move.
Big business, big money, and big data
Like all big business, insurance companies are focused on their bottom line – money. The auto insurance industry will likely exceed $250 billion dollars in revenue this year (JD Power). The auto insurance industry is stronger and wealthier than ever, yet over the past seven years, 80% of drivers saw insurance premiums rise nearly 25% (The Zebra). Tracking driver data through driver smartphone applications will likely increase the profits of auto insurance companies.
The recent push by big insurance is a trend related to telematics and usage-based insurance. Several years ago, an Ohio based company, Root Insurance, was founded with the goal to bring usage-based insurance to the forefront of the market place. Now Root’s valuation is estimated at roughly $1 billion and big insurance is aggressively fighting to get more data from its customers.
GPS data on the driving applications tracks how fast a person is moving, where a person stops, how long a person spends time at various locations, other people who are with the person at various locations, and many other things. This information is worth a lot of money and analyzing this information through the use of complex algorithms can drastically increase insurance company profits.
Is signing up for an insurance driving app worth the discount?
We think privacy concerns outweigh the potential discounts. There is no dispute that the data insurance companies collect through driver apps is vast and detailed. It is yet to be seen, however, how big insurance will use the data. Big business routinely places profits over people. Placing profits over people is not a new trend and will likely continue. So, what could insurance companies do with all this data? For example:
- Deny an underinsured or uninsured motorist claim,
- Refuse to renew coverage for a driver,
- Drastically raise premiums for a driver,
- Share this information with other insurance companies, and
- Sell this information to third parties.
Even if you are a safe driver, how will the insurance company know when you are a passenger in a vehicle and not driving? The data that companies get from apps could be used against you in a number of ways outlined below.
Uninsured and underinsured motorist claims (UM / UIM)
UM / UIM claims are claims that arise when the at-fault person in a car crash does not have enough insurance to cover the damages of the crash. All drivers should have UM /UIM coverage because Ohio state minimum coverage is only $25,000 and many Ohio drivers do not have any auto insurance. It is too early to tell if insurance companies will use data recorded from driving apps to deny large UM / UIM claims. For example, if an insured is going five miles per hour over the speed limit when another car runs a red light causing a crash with serious injuries, will his own insurance company use the data collected from the app showing his speed to deny a UM /UIM?
Future auto insurance coverage – rate increases and coverage denials
Insurance companies have complex algorithms that determine loss probability for each driver. The algorithms include much more than past driving history. For example, most algorithms use a person’s credit score to calculate rates because people with low credit scores are more statistically likely to have a car crash. Will these insurance companies start using the times a car is on the road to increase premiums or deny coverage? For example, rates may rise for a person who is on the road during early morning hours because there is a much higher probability for a drunk driving crash during the early morning.
Insurance companies have platforms that share information among companies, not just within the same company. Your data could be shared with other auto insurance companies and sold to third party vendors.
Do not be fooled by the slogans
State Farm is not a good neighbor, Nationwide is not on your side, and you are not in good hands with Allstate. Giving insurance companies full access to your data may not end well.
At Rittgers Rittgers & Nakajima we fight daily for individuals who have been seriously injured and for families who have lost loved ones. We frequently see big insurance make decisions based solely on money and not on people.
Recent example – serious shoulder injury that results in insurance company bad faith
A few months ago, we represented a woman who was seriously injured in a car crash that was not her fault. The at-fault party only had $100,000 in coverage which was paid. Thankfully our client had UM / UIM of $250,000. Sadly, the insurance company refused to make a reasonable offer to our client for the excess coverage and forced us to a jury trial. For months, the company offered $2,500. Partner Matt Nakajima tried the case in Warren County Common Pleas and the jury returned a verdict of $600,000. The last thing our client wanted as a jury trial but she was forced there by her own insurance company.
We offer free consultations in person and over the phone. We also will come to your home or hospital. Please do not trust insurance companies, even your own. Speak with a lawyer before making any statements to insurance companies.