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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.
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.
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