Smartphones & Insurance

Smartphones & Insurance

Insurance and technology are finally getting together and it is going to be interesting to see what comes from it. 


Insurance companies rely on data to determine what their rates are going to be. For years that meant keeping meticulous records and massaging the data to try and predict trends for the future based on what had happened in the past. 


This has led to teenagers receiving incredibly high insurance rates. Young men having higher rates than young women. Those with bad credit having worse rates than those with good. Even if those people ARE good drivers. 


And it is all because of factors that are unrelated to their actual driving. Now, we can all somewhat see where they are coming from, but it can be frustrating that because other people behave poorly doesn’t mean that I do.


The answer to all of these frustrations is being magically resolved by technology. Or so these insurance companies are trying to paint it as such.


Insurance seems to be trying to fix this problem of mischaracterization. Many of the companies now are offering programs where you can download an app (you used to have to plug a device into your car) where they can monitor the way you drive. 


This "Smart Driving" can seemingly solve the entire problem of being mischaracterized based on non-driving related attributes such as being a male under the age of 26. 


While this does seem to fix the problem, some limitations and privacy issues have been brought up. 


Most of the Insurance Companies use an app on a smartphone. You download the app and permit it to track you through GPS and to have access to a variety of sensors in your phone. One Insurance Company, (Root Insurance) has based its entire business model on this concept.


One of my biggest concerns and from what I have seen in the reviews is that it is difficult to distinguish between when a person is driving and when they are not. Despite claims to the contrary, I find it very difficult for my phone to know if I am driving or not when it is sitting in my work bag in the back seat or the cup holder. 


There have also been claims that it has designated them as driving when they were a passenger in a vehicle being driven by a terrible driver. 

The pendulum swings both ways on this as well. If you accelerate quickly or brake often and hard, or if you tend to go over the speed limit, all of these things are going to work against you. 


Despite any negative thoughts, I have, I do believe that this is where the future of insurance is going. Until self-driving cars further reduces the need for Auto Insurance of course.


Want to see how "Smart Driving" can impact your rates? Click HERE!