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What Does Personalized Auto Insurance Mean for Me, an Average Guy Shopping for Auto Insurance?

That depends on how good (or bad) a driver you are

When I was gifted my first car — a rundown 1990-something Volvo wagon — my parents told me that I would have to pay more for auto insurance than my older sister. The reason for this discrepancy was apparently that, as the Esurance website so pointedly explains, “Male drivers, on the whole, take more driving risks than their female counterparts.”

This idea that men are more dangerous drivers is indeed true: One recent study even shows that dudes are almost four times more likely to commit a traffic violation than dudettes. However, as Insurance Journal recently reported, the popular notion that men consistently pay more for auto insurance as a result might actually be misleading: “Several studies in 2018 and 2017 revealed that women over 25, particularly those between 40 and 60, often pay more than men — not less — for auto insurance, all other rating criteria being equal.”

They further explain that several insurance companies — including Geico, Farmers and Progressive — refused to comment on these findings or provide more insight into how insurance rates are actually decided.

In response to these discrepancies, in 2018, former California Insurance Commissioner Dave Jones issued regulations that prohibit the use of gender while deciding auto insurance rates in California. “An internal analysis by the department concluded auto insurers in California were all over the map with regard to how they handled gender as a rating factor,” Jones said in a recent interview. “In some cases, women were paying more and some less than similarly situated men. There was no consistency.”

This certainly seems to suggest that the decisions behind our auto insurance rates might be more random than we once thought. At the very least, there’s a significant lack of consistency from one carrier to another as well as to one state to another. For instance, a 2017 Consumer Federation of America analysis found that women in Baltimore, Minneapolis and Tampa generally paid more for auto insurance than men, whereas men usually faced steeper rates in Atlanta, Cleveland and Houston.

All of which might help explain why a recent survey found that 80 percent of insurance consumers demand more personalization, and apparently, several small auto insurance startups, like Root, are working toward providing exactly that.

So how does personalized auto insurance work?

The idea is that you have unique driving behaviors, which aren’t necessarily consistent with the statistics that show, for example, that all men are riskier drivers than all women. Therefore, you should have an insurance rate based on your actual driving skills — not just some random statistics that might (but also might not) predict those skills.

That makes sense. But how will they know what a good-ass driver I am?

Many of the insurance companies currently providing personalized auto insurance are using what’s called smartphone telematics. The idea is that sensors in or on your smartphone can systematically provide your insurance company with insights into your driving performance, including speeding, driving times, hard braking and distraction habits. These sensors also provide you (the driver) with regular feedback, which means you can potentially improve your driving ability, and therefore, lower your insurance rate.

So I need a smartphone to have personalized insurance?

Most likely — as an example, Root requires that their customers have at least an iPhone 5s or one of the newer Android phones. But come on, Average Guy, you already have a smartphone.

True. So… is this a good thing?

That really depends. Generally speaking, having this conclusive data prevents insurance companies from overcharging you based on random statistics. Better yet, providing constant feedback, which encourages drivers to reduce their rates by actively improving upon that feedback, presumably also motivating them to be more careful, which benefits everyone.

On the flip side, if you suck at driving and benefit from the current vague insurance cost deciders, having personalized auto insurance might increase your rate — or worse, make finding an insurance company willing to accept you near impossible. For example, Root refuses to insure bad drivers, since they cost the company (and their fellow drivers) money: “Thirty percent of drivers cause nearly 45 percent of all accident costs! We don’t think good drivers should have to pay for other people’s bad driving, so we don’t insure bad drivers. That means good drivers save.”

If I’m a good driver then, this is a dead cert, right?

Well, personalized auto insurance using smartphone telematics is still very much a work in progress, as Root explains on its website: “Driving ability is the single largest factor we consider when deciding your quote. We do take into account several standard factors that are mathematically predictive of risk or fraud — it’s the responsible thing to do — but we’re committed to eliminating as many factors as we can as technology progresses and artificial intelligence gets smarter.”

That said, unless you really are a terrible driver, personalized auto insurance might well mean reduced rates. If not, you may be shit out of luck, since many of the largest insurance providers in the U.S. are currently implementing or testing smartphone-based telematics programs too, which means personalized auto insurance may soon be the only auto insurance.

When that happens, dearest car insurance companies, please don’t go publishing my driving data — I really don’t need my girlfriend to know about my frequent 3 a.m. Taco Bell trips.