Saving money is important, especially on insurance.
I have done several reports about increasing rates and how it’s forcing families to readjust their budgets.
Michele Jones of Chesapeake says when her insurance went up, she shopped around to find a cheaper company.
She found an insurer that was not only cheaper, but also offered her a discount if she opted into their GPS tracking program.
"It's this little white square on the windshield,” she told me, pointing to her front windshield. “[The data collected] goes to an app and it tracks every trip I make, from when I start my car to when I stop it at a specific location."
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Jones says after six months, she was given a driving score and a $20 per month discount. With that $20 discount, on top of what she was already saving by switching, Jones says her total insurance savings is about $70 per month.
"At this point, with the discount I get from it, I don't think it can really touch any other company's rates, to be honest," she says.
Jones says she's paying less, but not everyone will.
"That data is being reported and the car insurer can actually charge a higher rate based on that data," says Kimberly Palmer, a personal finance expert with NerdWallet.
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Palmer says insurers use widgets with GPS technology and telematics to track your braking habits, phone usage, speed, and more. With that information, they are able to raise or lower your rate.
"Whether or not this saves you money really depends on your own driving behavior," she says. "So, if you're someone that doesn't drive too much, or you drive really safely and slowly all the time, maybe you work at home and you just don't need your car that much, it could actually save you money. But you could also be penalized. If you're someone who drives a lot late at night, maybe you work a night shift and you're driving at night a lot, that could be counted as behavior that's considered riskier, and in turn, you could be charged a higher rate."
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Brother Rutter, managing partner at Rutter Mills, says telematics data is also being used in the legal system.
"I will tell you that we have seen more insurance company lawyers using data from cars to deny claims, 100%," Rutter says.
He says the data gives insurance companies a negotiating advantage if you make a claim and insurers are looking for anything that could impact a driver’s risk profile.
"They're in the business of making money. So why would they be spending all this time and effort to lose money?" he says.
On the other hand, Jones says for now, it works for her driving habits, her family, and her wallet.
"My personal thought is, who really cares where I'm driving? Do they care that I'm going to the same church, school, work every day? Probably not. But if it's something you're not comfortable with, you don't have to do it," Jones says.
For others considering their options, the best thing to do is just look at your driving habits and lifestyle and see if it makes sense for you.
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People should also know that even if they opt out of these telematics programs, Palmer says there are other ways automakers and insurers are getting consumer information.
"A lot of the newer cars have a way to collect data about your driving automatically built in, and it might be already collecting that data without you realizing it," she says.
Palmer says it's been reported that some car companies will then sell that information to insurance companies.
Software developer Mozilla looked into the best and worst automakers when it comes to privacy. They say the car brands they researched "are terrible at privacy and security."
Click here to see the full report and learn which brands made Mozilla's list.
