Insurance Rates Influenced by Data from ’Connected’ Cars, Drivers Unaware

The proliferation of internet-connected vehicles has introduced a new dynamic in the relationship between drivers and insurance companies. A recent report by the New York Times has brought to light that a significant amount of driving data collected by these "connected" cars is being shared with insurance providers, often without the drivers’ full awareness. This practice, while enhancing usage-based insurance models, raises substantial privacy concerns and questions about consent.

General Motors, through its OnStar Smart Driver service, has been identified as one of the automakers sharing customer driving data with entities like LexisNexis, a data broker for the auto-insurance industry. This arrangement allows insurance companies to adjust premiums based on the analyzed driving behavior. One illustrative case involved a Chevy Bolt EV driver who discovered a 21% increase in his insurance rate, attributed to his monitored driving habits—a fact he was previously unaware of.

The issue at hand is not just the collection of data, but the transparency and consent regarding how it’s used. Many drivers unwittingly agree to share their data, not fully understanding the implications for their privacy and insurance premiums. The situation is further complicated by the fine print in terms and conditions, which consumers often overlook. This lack of clear consent and understanding underscores a broader concern about privacy in the digital age, extending to smartphones and other personal devices.

California’s privacy regulator has initiated an investigation into the practices of automakers concerning data collection and sharing, signaling a growing scrutiny of privacy practices in the automotive industry. For drivers concerned about their privacy, checking the privacy terms of connected car services and requesting a consumer disclosure report from LexisNexis are recommended steps to understand how their data is being used.

This evolving landscape of data sharing between connected cars and insurance companies highlights the need for clearer communication and consent mechanisms, ensuring drivers are fully informed and in control of their personal information.