In a local — and national — economy where many are struggling, you may find safe-driver insurance discount programs to be tempting. 

Auto insurance rates have gone up nearly 20% in the past year, so why wouldn’t you want to save an extra 10–15% on your premiums just for being a safe driver? Many of the largest car insurance companies offer safe-driving discount programs to customers.

Enter the problem: Such usage-based insurance (UBI) programs can actually hurt you in ways you’re probably not aware of — and the consequences could be devastating. 

In my experience dealing with insurance companies as a car accident attorney, there are three major ways insurance companies can seriously harm you with their UBI programs: selling your data to other insurance companies and undisclosed organizations, using your data against you in a personal injury claim, or leveraging your data to raise your rates instead of lowering them.

What’s perhaps most infuriating about UBI programs is that insurance companies might use your data against you to deny your personal injury claim if you’re in an auto accident.

In North Carolina, if the insurance company can make it seem like you’re even 1% at fault for an auto accident, you could get nothing for your claim. Imagine having your own driver data used against you to deny you coverage when you’ve been in a serious car accident and need compensation to cover medical expenses for painful and debilitating injuries. 

Take this example. If you get into a crash that’s not your fault and file a claim, the insurance company might look at your UBI data for what they could portray as “unsafe” driving behavior and then use that as a basis for denying you compensation. 

This questionable practice is also known as data-brokering, and has become a multi-billion dollar industry that is growing rapidly and is expected to reach a market size of more than $560 billion by 2029. Further, the 10 largest car insurance companies in the country collectively generated nearly $243 billion in 2023. The goal is clear: These insurance companies are trying to maximize profit.

Piling on, driver data collection technology is prone to giving inconsistent and incorrect information — and it’s often flawed. For example, hard braking to avoid hitting a deer in the road could be considered unsafe driving, even if the alternative would’ve been a serious crash!

The whole point of consenting to participate in a UBI program is to try to make your auto insurance rates go down. But data monitoring could be the reason your rates go up even if you’re really a safe driver. Progressive, for example, says that 20% of those who enroll in its UBI program end up seeing a rate increase. You could even have your rates increased when someone else drives badly in a car where you’re just a passenger.

Driver data tracking and UBI programs might seem like a good deal, but the benefit you receive is far outweighed by the risks you take on, likely without knowing it. For-profit insurance corporations don’t offer discounts if there’s nothing in it for them. So, before you agree to anything, ask yourself: Is a possible discount worth the risk of consenting to a potentially insidious UBI program?