California "Pay as You Drive" Insurance Proposal Stirs Privacy Concerns

July 17, 2009 By Wayne Hanson

A California Department of Insurance "Pay as You Drive" (PAYD) auto insurance proposal would begin mandating mileage figures as a basis for insurance premium costs. The more miles traveled, the higher the premiums. This proposal -- which one organization says would turn auto insurance into a "metered utility" -- goes beyond simply reporting odometer readings to allow tracking devices: "provided by the insurer or otherwise made available to the insured that accurately collect vehicle mileage information." And while the proposal now specifically excludes the collection of vehicle location data by such devices, it does not exclude collection of vehicle speed, seat-belt wearing and other driver behavior. While benefits include the hope of environmental and congestion relief, organizations such as the Electronic Frontier Foundation (EFF) see a public- and private-sector incursion on privacy. EFF says the proposal could allow private insurance companies to "coercively require customers to accept such devices in their cars" presumably with the whip of variable insurance rates.

Other vehicle tracking projects, such the "congestion taxes" in cities like Stockholm and London, monitor vehicle location. London, for example, charges drivers entering the downtown area a tax of US $13, but is now exempting hybrids. Vehicle tracking technology is already in use for toll payment, and the OnStar system -- which is standard on all new GM vehicles -- monitors vehicle location and can disable a stolen vehicle remotely. And according to media reports Progressive Insurance will offer Minnesota customers insurance discounts for using technology to track vehicle mileage and speed.

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