What Is Your Car Manufacturer Telling Your Insurance Company?

Key Takeaways The New York Times broke a story about how some drivers have been pummeled by rate hikes after their car manufacturer shared information about their driving habits with their insurance company without their knowledge. User-based insurance and telematics devices have been tracking driving behavior for insurers for years, but manufacturers telling insurers about driving behaviors is new. Some manufacturers claim that car owners gave consent while some manufacturers are denying sharing data with third parties.

In the auto insurance industry, telematics or usage-based insurance is nothing new. If you agree to surrender data about your driving, you can earn a discount on your premium if you exhibit safe driving habits. The reverse can also be true and for some companies, your rate can increase if you show high-risk driving behaviors.

However, The New York Times recently reported that rates for some drivers are increasing due to car manufacturers tattle telling on their car owners. The article claims that manufacturers are collecting data from their car owners and then sharing that data with insurance carriers, allegedly without their knowledge.^[1]

In some instances in which car owners have complained, the manufacturers have claimed that the car owners consented to having their data shared. In other instances, manufacturers are denying any wrongdoing. Ford's spokesperson, for instance, flatly denies that Ford sells data to third parties, specifically LexisNexis and Verisk, which is where information is allegedly being spread to insurers.

The way that user-based insurance works is that the driver is enticed by promises of safer driving and savings, but many drivers neglect to understand that their rates will go up if they exhibit what is considered hard braking or speeding.

Despite this, some car owners with vehicles from the biggest selling makers like GM, Kia, Chevy, Cadillac, Buik and more have seen enormous rate hikes or were denied insurance altogether due to data sharing, which determined that they speed, brake harshly and possibly even swerve.^[2]

Well, let’s consider what is considered hard braking and what is standard braking: Are all connected vehicles across manufacturers held up to the same standard for what’s just over the line of harshness? If so, who is the judge? And can you be penalized in a Chevy but not in a Volkswagen?

This practice of user-based data collection raises lots of questions, especially now that nearly every car being built today boasts connectivity. After this news began trending, however, some people are swearing off their carmakers and saying they will never drive those cars again.

Going forward, will manufacturers make their waiver of consent more transparent so that people know what to better expect? Or, if the car owners did not give consent, will the manufacturer be held accountable for the economic disaster that they’ve created for some of their drivers?

Only time will tell, but for now, it’s important that you read the fine print in your car’s owner's manual and ask if your vehicle data is being tracked and how it’s being used by your car manufacturer. If you’ve already consented without really knowing what you’ve signed, ask for a copy of that document.

Most importantly, if you choose to continue to stay connected, drive safely, because it helps to keep your car insurance rates low. In fact, it’s really the only way to pay reasonable insurance rates, whether you have user-based insurance or if you have a standard insurance policy.