Would you be willing to give up information on your driving habits in exchange for cheaper vehicle insurance rates? An increasing number of Americans are doing just that.
The cheaper policies are called Usage Based Insurance (UBI), usually administered through an app you can download to your phone.
The app will keep track of how you drive and transmit that information back to the insurance company, which then analyzes the data and decides how much your insurance rates will be based on that data.
The costs of insurance have been climbing so much that drivers are increasingly willing to make the tradeoff of privacy for a bargain, according to J. D. Power Insurance Business Intelligence Group Senior Director Steven Crewdson.
"One of the early examples of UBI that some people might be familiar with is the program called "snapshot" from Progressive Insurance, where many years ago you would get a device from the company to plug into your vehicle and it would share through telematics your driving behavior.
"And that would allow them to see your driving behaviors as an individual, but over the past few years those plans have evolved and are most often now done through an app.
"Typically, they're looking for things like, are you speeding? Are you engaged in hard braking, like, are you stopping very quickly? Maybe perhaps what time of year you're driving, perhaps where you're driving.
"The old way of pricing insurance relied on demographics, comparing you with others like you who drive like you. With UBI they can watch you as a driver, as an individual.
The average savings with UBI is about 10% compared with a traditional car insurance policy, Mr. Crewdson said.
Even though there are plenty of people who are concerned about the loss of private information, to many the tradeoff is worth it, USA Today reporter Medora Lee says.
"Because everybody is so, so concerned about inflation and high insurance costs, more people seem to be open to this these days," she told iHeart Radio.
Ms. Lee wrote an article recently for USA Today, explaining several aspects of the UBI system, and she found that 2025 could be a big year for growth of this type of insurance.
It's interesting that Tesla car owners are already familiar with UBI because that's the only kind of insurance Tesla uses.