Telematics: Helpful Discount Tool or Invasion of Privacy?
Ru Chen
· 4 min read
Everything seems to collect your data these days. Violation of privacy is a growing concern, and it’s spreading to
car insurance
too. Telematics gathers comprehensive information about your driving. In theory, it should save people money and help the law discern who is at fault in case of
car accidents
or criminal cases. But is it just another terrible invasion of privacy?
How does telematics work?
Telematics car insurance is also called black box insurance. That’s because a small black box is installed into the car (or downloaded as a smartphone app).
The black box links to a GPS device, which records:
- Vehicle speed
- Location
- Mileage
- Driving frequency
- Time of day car is in motion
The device can also measure how hard the driver brakes, car acceleration, and how sharply the driver takes a corner.
Usually, insurance companies look at a driver’s age, medical history, life history, and credit score to determine your premium rates.
A telematics insurance company uses this data to figure out a personalized rate for the driver. The better a driver scores based on their data, the less they have to pay for coverage. This is usually cheaper than regular insurance.
Typically, telematics programs also make suggestions to help drivers improve their scores, which can make their insurance cheaper.
MORE: Cops Are Using Telematics Data From Suspects' Cars to Solve Cases
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Data privacy concerns
Who has access to your data? Your insurance company, definitely. But will they sell the data to invasive advertisers? Scammers? Criminals?
Forbes
points out that a device collecting so much data on you can be easily abused if it falls into the wrong hands.Despite companies trying hard to convert clients to telematics-based insurance, only around a quarter of car owners have bought into the idea.
Regulators are also wary of potential abuse of telematics. A lot of the time, data collectors shroud the info around what happens to users’ data.
In 2020, California even passed a Consumer Privacy Act. It requires insurance companies to give consumers full transparency and control over their personal data.
No escape from your personal spy—or protector?
One big concern about telematics data is how it can be used against you in a criminal or civil case.
Your car can be used as a reliable witness to help you prove your innocence. In cases like this, the black box might just save your life.
But it can also condemn you.
That’s because with the black box, telematics can pinpoint where you went, when you went there, and for how long you were there. Because it also has voice recognition, it can provide proof on who’s behind the wheel.
The police and government can retrieve this data with a court order. In civil actions, especially divorce, data can also be easily subpoenaed. And it often is.
Attorneys say that telematics data is frequently used in divorce and custody battles, accidents and liability cases, and numerous litigations including warranty disputes.
Telematics do glow with usefulness at times. It has convicted murderers, closed hit-and-run cases, and in one case, found a father not guilty of smothering his infant daughter.
The future of telematics insurance
MORE: Are East Coast Drivers Actually More Aggressive? Here's What the Data Says
In the long term, whether telematics insurance dominates will likely be decided by consumer choices.
If more and more people decide they care more about privacy than having cheaper premiums, telematics won’t be able to take over the market.
In the meantime,
Jerry
can help you find cheaper insurance without selling your information to other companies. Jerry is a car super-app that shows you competitive quotes and can even cancel your old policy for you if you want. You won’t get any pushy calls or annoying emails, because Jerry isn’t a lead generation service.
