It’s becoming more and more common to hear that some EV manufacturer or other is going to offer their own insurance. It will, of course, be underwritten by a company that specializes in insurance, but by going through a manufacturer like Rivian or Tesla, you can save money. Why? Because the manufacturer can give the underwriters a lot more data to justify lower rates.
This ends up being especially important for the owners of high-performance EVs, because premiums tend to be stupidly high.
Not all customers want to do this, though. Concerns over privacy and data quality, as well as the future of the insurance relationship, discourage this. Not only do these customers pay higher rates, but they miss out on chances to learn how to be safer drivers that can come from a properly designed driver monitoring system (something that Tesla aims to eventually achieve with their “safety scores”).
In this article, I’m going to go through the reasons I think telematics insurance is a bad idea (despite the good intentions) and then in a second article, I’m going to suggest some good alternatives to lower our rates that are not only less risky, but also a lot of fun!
I know all readers won’t agree with my concerns, but I’m far from the only person who feels this way and won’t buy telematics-based insurance. Alternatives can help lower everyone’s insurance rates and improve general road safety, so it’s important to find some.
On The Surface, It Makes Sense To Share Vehicle Telematics With Insurers
With great power comes great responsibility. EVs tend to be higher performance vehicles, and some people just aren’t very responsible with those power and torque levels. Not only does the extra power make an irresponsible driver lose control, but the extra weight of an EV and the higher speeds involved can make for some spectacular crashes that cost insurance companies an arm and a leg.
When enough people get into a spectacular crash with a certain make and model, the car gets a bad “symbol” for insurance, driving up the rates for all owners, no matter how great their individual driving records are.
To help with the rising costs, manufacturers are looking for ways they can step in and help owners get better insurance rates, and the easiest thing to do is just give the insurance industry more data that they can crunch to feel better. Insurers are obsessed with numbers, and don’t seem to ask hard questions about the quality of the data.
Why I Personally Won’t Share My Telematics With Anybody
There are three fundamental problems I have with driver behavior tracking: privacy, “garbage in, garbage out,” and the fact that correlation doesn’t imply causation.
Problem 1: Privacy — You Can Literally End Up In Prison When Someone Else Has Your Data!
Let’s start with privacy. I get that drivers using things like Progressive Slingshot, Tesla Insurance, or the other upcoming offerings by other EV manufacturers are voluntarily submitting their data for inspection in hopes of getting a discount. You, as a driver, should have the right to share your data with whoever you want, and prohibiting you from doing so would violate your rights.
What most people don’t know is that they’re getting more of a privacy violation than they’ve bargained for once that data gets collected and stored somewhere.
The “justice” system is the thing you should fear the most if you’re paying attention. Say your spouse takes you to court for divorce and ends up with your car’s stored location data. Sure, you might have been going to the convenience store next to the strip club or a relative’s house next to the place where sex workers gather on a regular basis, but that can’t be determined to a high enough degree of accuracy. So now you’re needing to prove innocence to a judge or end up getting hosed.
Or worse, what if someone commits murder, and you happened to stop nearby for completely innocent and disconnected reasons? People have been arrested and interrogated based on location data, losing their jobs and reputations despite being 100% innocent. We don’t know how many people were less lucky, and are sitting behind bars for a crime they didn’t commit because Google or someone else gave the cops garbage data.
Technically, we all clicked “next” and “agree” on some EULA the length of an Ayn Rand novel, but we certainly didn’t consent to having our lives ruined. In a world where law school professors recommend that you don’t speak with police at all, we’re all doing a lot of talking with the data our computers collect. Having our cars join the chorus of potentially incriminating evidence isn’t a great idea. The risk of losing everything just isn’t worth the small amount of money we could save.
There are many other unforeseen risks that come from lost privacy. Hackers, rogue authoritarian governments, criminals, and many other ne’er-do-wells would love to use as much data against you as they can. It’s good security practice to simply deny them any opportunity by minimizing the data that gets flung around.
Problem 2: Overtrusting Bad Data
The other problem is interpretation of data. Poorly collected data, divorced from any context, can make a very safe driver with a great driving record look terrible, as we’ve seen with some Tesla safety scores. Sure, the Stans will tell good drivers with a low score that they must in reality be a bad driver, but good driving records devoid of accidents aren’t something we can just ignore because some programmers with no expertise in statistics and risk management programmed a car to come up with a number.
Yet another problem is that correlation doesn’t equal causation. Sure, someone who frequently drives aggressive may be a higher risk, but that doesn’t mean that someone who drives slower is actually safer. It is fairly well established that falling below the mean speed of the cars around you increases one’s risk of being involved in an accident. By trying to impress a computer that lacks understanding of the situation around you, you could in fact become a higher crash risk than you normally are.
If the insurers eventually catch on to this problem, they’ll want even more data, or they’ll want to raise everyone’s rates. Let’s face it, they have a financial incentive to do this, so don’t be naive and put it past them.
Other People On The Road Didn’t Sign Up For This
One other issue is that other people on the road didn’t sign up to be part of your manufacturer’s experiments. In theory, doing something like a safety score or other driver monitoring increases safety, but in practice it can lead to second guessing one’s driving, distraction, and even unsafe driving that fits the score but not the context of the situation.
Coming up with alternatives that happen off public roads can help improve public confidence in innovative insurance programs instead of sowing public mistrust.
Even If I’m Wrong, These Concerns Still Matter
In Part 2, I’m going to explain that these concerns, right or wrong, matter. A significant portion of the motoring public doesn’t want to participate in telematics-based insurance schemes, so there’s a lot of opportunity for companies to make money and improve road safety that they could miss out on if alternatives aren’t available.
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