Safe driver? Consider telematics

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A side benefit: If the device helps you drive slower and eliminate rapid acceleration and braking, you'll also save money by improving your gas mileage and spending less at the pump.

What are the disadvantages? Privacy; the Big Brother nature of the devices can be disconcerting.

"The first thing you want to look at is precisely what information the telematic device is capturing about the driver," said Paul Stephens, director of policy and advocacy at the Privacy Rights Clearinghouse. "The worst-case scenario is GPS (Global Positioning System capability) for location tracking."

That's a misconception consumers have about telematics — that they're being tracked geographically, Progressive's Hutchinson said. "That's the biggest sensitivity people have with telematics," he said. "We purposely didn't add GPS so we don't track that."

State Farm, however, is an example of an insurer that can retrieve location information because its safe-driving program is part of a larger information service, similar to OnStar, that uses GPS. A spokesman said geographical data is not monitored and is not used in calculating safe-driving discounts.

GPS isn't the only concern, however.

"If you go beyond just aggregate mileage, which perhaps is not very troubling, these devices are not only recording your driving behavior but also your social behavior," Stephens said. For example, an insurer could notice you use the car at 11 p.m. and again when bars close. It might hint that you regularly go out drinking at night, he said. "Do you really want your insurance company to know what you're doing with your life?"

Several insurers cite driving after 11 p.m. or midnight as a risky behavior that can affect safe-driving discounts.

Another issue is that collected data potentially becomes available for court proceedings. Stephens said it's easy to imagine a scenario in which driving data is sought in a divorce case, especially if one wants evidence that the other is cheating.

"But the real thing we're concerned with as privacy advocates is the slippery slope," Stephens said. "As we see with using the Internet and using a cellphone, companies are constantly incorporating new mechanisms to do additional data collections that are far more invasive than initially contemplated by the technology."

And no matter how safe a driver you are, miles matter. For example, Allstate's Drive Wise discount will not apply if you drive more than 18,000 miles per year, according to the company. Driving fewer than 12,000 miles can lead to the largest savings.

"Everybody has their own threshold for what is right for them in terms of sacrificing their privacy versus saving money," Stephens said. "If you're the sort of individual who doesn't care at all about that sort of thing, sure, go ahead and get the discount. On the other hand, if you're someone who places value on keeping the things you do in your life private, you might want to give a second thought to selling your data to an insurance company for a discount."

gkarp@tribune.com

Twitter @spendingsmart

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