For those who only drive fifteen minutes a day and wish they could pay a lower auto insurance rate, Progressive Casualty Insurance Company may have come up with a solution. Progressive’s MyRate plan, which is now available in seven states, utilizes technology to pro-rate an individual by his or her driving habits. Unfortunately, those who wish to take advantage of Progressive’s new system may be trading away some of their privacy.

The Progressive MyRate tracking device.

The Progressive MyRate tracking device.

Integral to Progressive’s new plan is a gadget that policyholders are required to install in their cars. This device gathers data about how often the car is operated, what times of the day the car is driven, and even how frequently the driver abruptly stops and starts. Drivers that are statistically less risky are rewarded with lower rates, where those that are considered riskier pay more.

Understandably, the new device has raised privacy concerns among consumers. While Progressive has assured the public that it will refrain from tracking policyholders’ driving locations, many still fear the amount of information that Progressive may obtain. Consumer Watchdog’s Carmen Balber noted that the information collected by the device could eventually be used in lawsuits or other legal proceedings, which would be similar to the effect that electronic toll payment devices have had. In addition, opponents of “pay as you go” insurance plans insist that lower-tech alternatives, such as regular odometer inspections, could serve the same purpose without posing a threat to privacy.

Some have touted the benefits of MyRate and praise its potential to reduce overall driving, which would have the effect of minimizing aggregate insurance rates, pollution, and accidents. Others, though, are skeptical about the benefits, and argue that to realize any significant discount, one would have to drive quite rarely. Moreover, Progressive may actually increase rates for driving too much, which seems unethical considering the valuable information policyholders would be providing to Progressive.

As long as “pay as you go” insurance plans remain voluntary, any possible infringement on privacy is probably legally acceptable. The fear, of course, lies in the slippery-slope possibilities of data collection devices such as Progressive’s. If GPS capabilities ever make their way into insurance tracking devices, giving insurance companies the capability to track policyholders’ every move, judicial intervention may be forthcoming. Until then, those that drive infrequently will have the option to trade lower rates in exchange for a little privacy.

George Gaskin

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One Response to Trading Privacy in Exchange for Lower Insurance Rates?

  1. dosmastr says:

    Um… what about those of us who work nights and get off at 3:45am… should i sit in the car for 16 minutes before commuting 15 min home?

    I wonder which cars a capable of greater than 7mph per second acceleration….and for that matter I would argue that when merging traffic it’s safer to use too much speed than not enough, sitting someplace where others would zoom out stuck behind you could cause road rage…which could cause accidents, making my rate a terrible idea.

    Of course a light bit of humor there but seriously, why is driving after midnight — when the roads are CLEAR considered less safe then rush hour?

    If it was smart they would use “limited” GPS to tell “oh he’s just coming home from work, not a bar, every Monday through Friday”

    I drive on a highway where if you aren’t doing 70 you aren’t keeping up with the flow of traffic (LESS SAFE!!) at 10:30pm and then do 60 mph home at 3 to 4 am when the road is clear even though the speed limit is 65.
    (I drive slower home just to take it easy on my car and increase fuel economy)

    They should use FOLLOWING DISTANCE in conjunction with speed to determine safety.

    Quote from progressive.com on NJ program:
    As you’re tracking your renewal, you may see an increase in your rate — up to 9 percent — based on your driving habits. If you don’t think that you can change your driving to receive a lower rate, you have the option to cancel the program at any time. Please note that any MyRate data collected will not continue to be used after leaving the program.”

    Ok so does this mean if i see my rates going up I can kill the program and they drop back to what they would be without it?