By Matt Hale
The issue of pay-as-you-go insurance came onto my radar, when a neighbor was apoplectic because her insurance company sent her a warning message about driving too fast in a couple of instances. She didn’t understand that her auto insurance was not only tracking the miles she was driving, but was also tracking her location, speed, braking, and her driving habits. She thought that her “pay-as-you-go” insurance was only tracking the distance she drove, but she was wrong. And, it was all spelled out in her insurance contract.
Auto insurers are now heavily marketing a “pay-as-you-go” automobile insurance policies, or insurance policies based on “safe driving” habits. This is being sold as a cost savings plan. I mean, why pay for auto insurance during the times your car is parked in your garage? Not surprisingly, these types of policies are being marketed in the same fashion as “masking up” or “social distancing”. “Safe” is the new ultimate aspiration, more important that rights, more important than privacy, more important than mobility.
American Family Insurance proudly states the following on their website:
“We all would love to know that we’re driving as safe as we can. With car monitoring systems, or telematic devices, that’s actually possible now. Vehicle monitoring devices work through an app on your smartphone that gathers and analyzes key data about the way you drive. Details like your GPS location and driving speed are all fed into a database that records your performance on the road every time you’re driving. After a period of time, your auto insurance may reduce your premium if your driving habits are found to be safe.” i
This is so convenient that you do not even have to install a tracking device on your car. The tracking device is your phone, which will also conveniently track where you park your car. Or, what store you go into. Or, if you socially distance appropriately. Perhaps in the future you will be able to get an additional discount for wearing a mask or getting a vaccine.
Automobile insurance companies aren’t the only ones getting in on the tracking bonanza! A 2014 article on US News and World Report touted the benefit of using fitness trackers to track steps to encourage people to be healthier. An ecstatic quote by a VP of a health analytics company, states: “Consumers win, because as they pay more out of pocket for their health-related costs, they are looking for ways to save money and would be more likely to participate in programs utilizing tracking devices to motivate them to get healthier.” ii Several large health insurance companies are now offering discounts on Fitbits and other “health devices” in order to give an incentive for their use. iii In short, the message is similar to auto insurance companies: be safe, be healthy, get tracked!
The Insurance Contract: Finding an Excuse to Deny Coverage
When you buy insurance, you are paying a company to stand in your shoes when you encounter a risk. So, for auto insurance, you are paying a company to stand in your shoes and protect you when you crash into and injure somebody. When you buy health insurance, you are paying that company to take on the risk of you getting sick. Every insurance contract defines what is covered under that contract and what is excluded under that contract. And, every insurance company, uses those exclusions to the maximum of their ability to save money. The ultimate goal for any insurance company is to collect maximum premium dollars and pay out minimum claims dollars.
Secondly, insurance companies have a financial interest in controlling behavior. If you get a speeding ticket, your insurance rates go up. It turns out that people who drive faster than the speed limit get into more accidents and cause the insurance company to have more claims. When people get a speeding ticket, they are often more concerned about the impact on their insurance rates then the actual cost of the ticket.
Insurance companies are not the government. They are regulated private entities. They are not, however, bound by anything in the Constitution. Insurance companies are governed by individual state laws and regulations that are there to protect consumers when the company fails to abide by its contract or acts in “bad faith.” But, insurance companies are not bound to any notions of privacy or other rights as defined in the Bill of Rights. Therefore, the data generated through the monitoring of you, belongs to your insurance company, and may be shared.
So, imagine taking a family road trip, and as your car crosses from say a blue state to a red state, a little warning pops up telling you that you do not have insurance coverage here. Or imagine going from a mask mandate state to non-mask mandate state and finding out that your health insurance coverage is suspended. While this may seem far fetched now, I fear that it will only become all to normal in the not so distant future. Therefore, approach your insurance with caution and read the insurance contract so you understand what exactly it is you are buying.
Footnotes:
i https://www.amfam.com/resources/articles/understanding-insurance/car-insurance-tracking-device
ii https://health.usnews.com/health-news/health-wellness/articles/2014/10/03/can-a-fitness-tracker-save-you-money-on-health-insurance
iii https://moneywise.com/a/fitbit-health-insurance-discount
