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If you ever ask yourself, “Why is my insurance going up?” the first answer that comes to mind may not be your vehicle’s increasing technology and connectivity. Many modern vehicles — i.e., connected cars — are now equipped with sophisticated systems capable of collecting an array of data, from driving habits to location and even personal preferences. Car manufacturers may then share this information with insurance companies and other potential third parties who analyze this data for various purposes, including customizing auto insurance rates.
Is your car spying on you? Let’s explore the rise of connected cars and how this technological leap introduces new privacy and data security concerns.
The Rise of Connected Cars
So what are connected cars? These vehicles are designed with the capability to access the internet, enabling them to interact with various devices, networks, and services. They boast sophisticated technologies and features, employing hardware and software solutions to enhance the driving experience. Overall, connected cars can help improve safety, offer greater convenience, and elevate entertainment options for drivers and passengers.
Specific benefits may include:
- Real-time maps and traffic alerts.
- Advanced driver-assistance systems (ADAS) features, such as lane-keeping assistance, adaptive cruise control, blind-spot monitoring, and collision avoidance systems.
- Vehicle maintenance alerts.
- Emergency assistance to facilitate faster response times.
- Infotainment systems, including streaming music, videos, games, news, and more.
The growth of connected cars is a testament to their increasing popularity and recognized benefits. A study by McKinsey & Company states that by 2030, about 95% of new vehicles sold globally are expected to be fully connected, up from around 50% in recent years.
Revenue in the connected car market is also on an impressive uptrend. According to a report by Fortune Business Insights, the global connected car market size was valued at $55.56 billion in 2020 and is expected to grow to $191.83 billion by 2028. Grand View Research also supports this positive outlook, estimating the market size to reach $243.75 billion by 2030.
Data Collection in Connected Vehicles
While connected vehicles offer many benefits, the very features that enhance the driving experience also make them a gold mine for personal data. Every route taken, the speed you drive, the times of day you use your vehicle, and even your music preferences can be recorded and transmitted back to manufacturers and, potentially, third parties.
A notable case involves a driver of a General Motors (GM) vehicle, who experienced a significant increase in auto insurance rates after their driving data was reportedly shared with insurance providers without explicit consent. In the New York Post article, a Chevy Bolt owner saw a 21% increase in his insurance costs after OnStar Smart Driver, a subscription service by GM, collected and shared detailed driving data with LexisNexis, which then provided a report to insurers. The LexisNexis report included specifics such as trip durations, distances, and instances of rapid acceleration or hard braking, contributing to the insurance rate adjustment.
The New York Post article also reveals that other manufacturers, including Subaru, Mitsubishi, Honda, Kia, and Hyundai, offer similar data collection features, often without clear disclosure that this data might be sold to third parties like insurance brokers. For its part, Ford has taken a stance to only share driver behavior data with insurance companies if explicit consent is given through an in-vehicle touch screen, according to company spokespeople. Meanwhile, manufacturers like Kia, Mitsubishi, Hyundai, Honda, and Acura allow drivers to opt out of on-road behavior data collection through their apps. However, Honda’s approach requires drivers to agree to a lengthy terms and conditions document mentioning data sharing with Verisk.
While manufacturers and data brokers argue that this data collection and sharing are meant to personalize and improve services, including auto insurance quotes, the lack of transparency and control over personal data remains a concern.
Conclusion
Whether you have a connected car or want to buy one, it’s a good idea to find out what data your vehicle collects, how it’s used, and who has access to it. Consider contacting your manufacturer to ask about your car’s information and where it’s going. Also, a resource like Vehicle Privacy Report can show what types of data your car is harvesting and who your manufacturer might share that information with.
If you’re interested in exploring insurance options that respect your privacy and offer control over your personal data, consider Mercury Insurance. While we use many factors to determine your auto insurance premium — e.g., driving history, car make and model, location, etc. — we don’t use any LexisNexis or Verisk data for rate-making or underwriting. Get in touch with us today to lock in best-in-class coverage at an affordable rate.
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