Auto Insurance Rate Hike? Your Phone Might Be to Blame

Drivers routinely use their phones in the car to listen to music or get directions. But the devices may be listening back, tracking driving behavior, and ultimately sharing that information with insurers.

A recent report from The New York Times named three popular apps — Life360, MyRadar, and Gas Buddy — as recording and sharing driver data with Arity, an Allstate-owned analytics company. Arity, in turn, uses the information to create consumer “driving scores” that insurance companies can purchase “instantly.”

Arity receives data for more than 40 million drivers through consumer mobile apps and usage-based insurance (UBI) programs, the company says on its website. Driver scores profile “risk-related driving behaviors” such as speeding, hard braking, extreme acceleration, and using a phone while driving.

Using one of Arity’s partner apps in the car could mean the software is sharing a driver’s every swerve, brake, and acceleration with the analytics company — and ultimately with insurers.

App use could affect car insurance rates

While users must opt into each app’s location services, the apps’ privacy statements and disclaimers don’t explicitly state that the apps are recording driving data.

The apps use common disclosures verbiage like “collect certain information” or, “We may collect third-party data and reports.” Disclaimers may acknowledge that Arity “powers” the analytics and “enhanced services” on these apps, but don’t explain what Arity is or does. Disclosures don’t make it clear that insurers could ultimately buy the data and use it for rating purposes, either, according to The Times.

Drivers with a poor Arity driving score could face higher car insurance rates or even struggle to secure coverage.

Car insurance rates soared 24% nationally in 2023, according to Insurify data. And rates will climb another 7% by the end of 2024, Insurify’s data analysts predict. Driving record is the most important factor insurance companies consider when setting rates. Typically, insurers offer discounts and incentives to drivers who are willing to enroll in UBI programs or use telematics programs to monitor their driving habits.

“This way of gathering data essentially allows insurers to access telematics data for drivers who might have opted out of enrolling in a UBI or telematics program,” said Jessica Edmondson, head of data journalism at Insurify.

But there’s no guarantee the apps will accurately attribute driving behavior data. The apps track general motion data regardless of who’s behind the wheel.

“If you have one of these apps on your phone, just being a passenger in a vehicle with a high-risk driver could affect your car insurance rates down the road when your policy comes up for renewal,” Edmondson said.

“Phones have accelerometers — and you have a lot of sensors there to provide meaningful data — but how good it is from one app to another could vary widely, and we have absolutely no way of knowing that,” Jim Anderson, CEO of Beacon, told The Street. “That’s a real problem.”

Other data-tracking sources

Arity isn’t the only company to stir controversy by collecting driving data.

General Motors (GM) is currently facing litigation alleging the company sold data, collected through the subscription-based communications system OnStar, to insurers. The litigation alleges OnStar tracked driving behaviors and sold data without drivers’ knowledge. Some drivers said the data collection affected their car insurance premiums, raising their rates by as much as 21%.

Other automakers, including Honda, Kia, Mitsubishi, Acura, and Hyundai, also face scrutiny for allegedly selling insurers driver data collected with in-car smart features. This includes if a driver is unbuckled or brakes and accelerates too hard.

What’s next? Protecting information, data, and rates

As the investigation and, in some cases, litigation continues, experts advise consumers to protect their information by turning off location services, Bluetooth, motion and fitness trackers, and background app refresh.

“Disable access to Bluetooth or networks in general. That’s how many apps actually track, even without knowing your GPS location,” Ivan Tsarynny, CEO of Feroot Security, told The Street.

Other helpful steps include:

• Read disclaimers.

• Be cautious about sharing location information with apps.

• Read privacy statements.

• Select the “Do not sell my personal information” option if an app offers it.

“[Consumers] need to be more vigilant about their protection of their privacy,” George Bradner, assistant deputy commissioner and property and casualty division director at the Connecticut Insurance Department, told the Times.

In April, Connecticut’s insurance regulator issued a consumer alert warning noting that new cars may track people’s driving and affect how much they pay for insurance.

Currently, drivers can’t access their Arity driving score. But Arity does say it will provide consumers a copy of their driving data report if they’ve given an insurer permission to obtain their driving score as part of providing an insurance quote.

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