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Michael Aminov-Tobin almost forgot that an auto insurance company was monitoring his driving. He wasn't paying close attention to the speed with which he drove or how hard he hit his brakes. So he was amazed when the company offered to secure its 2016 Hyundai Veloster Turbo for $ 100 a month less than it had paid.

"When it came up with the price it did, I was like," Holy Crap, it's awesome! "Says Aminov-Tobin, 25, who runs a video production company from his home near Columbus , Ohio.

It has benefited from a growing trend known as insurance based on use, or UBI, in which auto insurance companies electronically controls a customer's guidance and offers discounts in return.

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Such programs can be a great deal for careful drivers and low-mileage users, but they also have significant privacy concerns, experts say. Before accepting to be monitored, drivers must understand the risks and ask the right questions.

"The data is so rich," says Ting Zhu, associate professor of the Krannert School of Management at Purdue University who studies the UBI. "They know exactly where you are going and when you go."

The keys sit on a car insurance. (Photo: The Motley Fool)

The draw for drivers

Letting people prove to be safe drivers makes car insurance prices fairer, defenders say.

Traditional auto insurance rates are based on your record driving, plus demographic factors such as age, location and marital status. While usage-based policies still consider these factors, they base part of the rate on driving behavior using telematics technology. Data is generally collected via a plug-in device for your car's diagnostic port or a smartphone app.

"Good drivers should pay less," says Robert Hunter, insurance director of the Consumer Federation of America. "How you drive, and not who you are, you should determine your rate."

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Discounts can be significant for good drivers. With Nationwide's SmartRide, discounts can reach 40%, says David Arango, senior vice president of personal lines, which includes cars and homes. At Root Insurance, the startup that ensures Aminov-Tobin, the best drivers can reduce their rates by almost half, says CEO Alex Timm. In both companies, managers say, the typical savings are around 20 percent.

Even low-mileage drivers can benefit from it. Evan Makovsky, 42, from Hoboken, New Jersey, estimates he has saved $ 1,000 a year by switching to Metromile, which pays a basic monthly fee plus a rate per mile. Makovsky drives his 2009 Volkswagen Passat mostly on weekends.

But the rates are not always better with insurance based on usage. For example, if you change jobs and have a longer commute, a pay-per-mile policy could become expensive. And with the Progressive Snapshot program, which monitors your way of driving, the rates increase by about 20 percent of drivers, according to the insurer. Bad drivers won't pay more nationally, says Arango, but they may lose the initial discount.

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Risks for data privacy

If the price break is worthy of the privacy that you give up leaving the control of the guide depends how you see the risks.

Aminov-Tobin was not worried: "If you want the best rates, I guess you have to sacrifice a little," he says.

But the privacy expert Jen King fears that drivers can sacrifice more than they believe.

"Where you go every day you can tell people a lot of what you're interested in, where you live, who you can re-associate with," says King, director of consumer privacy for the Center for Internet and Society of the Stanford Law School.

Although the information is not sold, he says, it could be used in ways that the driver did not anticipate.

A data breach is another danger, says Zhu of Purdue Indicates the 2013 Target Violation in which cyberattackers stole personal information from millions of customers, Zhu says his research found that after the violation, drivers were more likely to abandon the car insurance based on the # 39. ; use.

However, UBI appears to be gaining ground, a JD Power study showed that 10% of insurance customers used these programs in 2018, from 8% of the previous two years. universally available, l & # 39; National Association of Insurance Commissioners estimates 7 out of 10 that automotive insurers will use monitoring technology within the next year.

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Insurance policies based on usage vary. A few traces of braking, idling and acceleration; others focus on mileage. Some monitor driving for a limited time; others continue to follow. So it's important to look around and ask questions.

The CFA Hunter says to find out exactly what information will be collected by the insurer and if it is really related to good driving. Also ask:

  • How each bit of data affects your rate.
  • If you can refuse to share information without penalty.
  • If the company will share or sell your data.

And remember that the driving data Janet Ruiz, director of strategic communication for the Insurance Information Institute, reports only part of the insurance rate.

"The most important thing consumers can do for their car insurance is to have a good driving record," he says.

More from NerdWallet:

Lisa Green is a writer for NerdWallet, a personal finance website. Email: lgreen@nerdwallet.com. Twitter: @lisaccgreen.

NerdWallet is a US USA content partner that provides general news, comments and coverage from across the web. Its content is produced independently of USA TODAY.

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A GasBuddy study examined the 30 largest metropolitan areas by population and concluded that these cities have the most aggressive drivers.
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