David Hurwitz was left scratching his head after he recently received word from his insurer, State Farm, that his low-mileage discount may no longer apply.
Hurwitz, 78, a Calabasas, Calif., resident, was supposed to drive fewer than 5,000 miles a year to get the discount. But State Farm said in an email that it believed he may have actually traveled 5,700 miles last year.
“How would State Farm know?” Hurwitz asked.
The answer lies in a shadowy web of companies buying and selling data on people’s driving habits.
Before we get into that, it’s worth pointing out that low-mileage discounts are a good thing for both consumers and insurers. They reflect the reduced risk to the insurer of a driver who doesn’t do much driving.
Some insurers prefer to see for themselves and require policyholders to place a sensor on their vehicle that will report mileage directly to the insurance company.
There’s nothing wrong with that, as long as the car owner gets to decide whether the tracking technology is installed.
Nor is there anything hinky about a low-mileage discount being revoked if a driver exceeds his or her quota. A deal’s a deal.
That said, it’s troubling from a privacy standpoint – and a bit creepy – that information about your driving is being used by various companies as a profit generator without your explicit authorization (even if it’s tacitly covered in the fine print of whatever contract you’ve signed).
“I think that most consumers would be very surprised to learn about this,” said Rosemary Shahan, president of Consumers for Auto Reliability and Safety, a Sacramento, Calif., advocacy group.
The email Hurwitz received from State Farm didn’t reveal the source of his mileage data.
It says only that “we received a notice that shows the 2015 Infiniti is being driven 5,700 miles a year.”
It asks Hurwitz to confirm if that’s correct. “If not, can you please provide what your annual mileage is along with your current odometer reading?”
Hurwitz’s car doesn’t have one of those sensors that report back to his insurer. He figures his local Infiniti dealer, where he gets his 2015 Q70 serviced, must be sharing information with State Farm behind his back.
“There’s no other explanation,” Hurwitz said.
Aileen Clarke, a spokeswoman for Infiniti USA, said that while the carmaker “does not share mileage data with insurance companies,” Infiniti dealers “are independently owned and operated businesses,” and may cut their own data-sharing deals.
Aaron Lowe, senior vice president of government affairs for the Auto Care Association, a trade group for auto shops and parts makers, said it’s common for dealers to sell vehicle information, including odometer readings counts, to insurers or their proxies.
“There’s a lot of information that gets traded,” he told me. “It’s amazing.”
State Farm tells policyholders online that “you must provide an odometer reading prior to each policy renewal (typically every six months).”
The company also acknowledges online that it “may use a third-party source to validate your entered odometer reading.”
Sevag Sarkissian, a State Farm spokesman, declined to identify that source or to outline the steps involved in accessing such information.
“Our vendor relationships are considered confidential and therefore we are unable to share detailed information about their processes,” he said.
Be that as it may, a State Farm agent confided to me that the mileage information typically comes from data broker LexisNexis, which offers insurers a service called LexisNexis Vehicle History.
An online brochure for Vehicle History says it “provides a robust and simplified data gathering and delivery process that insurers can incorporate in their existing workflows to access this type of data.”
Along with a driver’s annual mileage – “a sought-after data point,” says LexisNexis – Vehicle History lets insurers know about severe accidents, major and minor damage, and “rental use,” presumably related to a car being in the shop (possibly for a minor accident you didn’t report).
“Relying on consumers to provide critical vehicle-related information can be risky for the insurer,” the brochure notes.
LexisNexis Vehicle History “uses information from a variety of data sources to easily integrate important vehicle-related attributes into the pricing equation.”
Adam Hudson, senior director of LexisNexis’ efforts to connect the auto and insurance industries, declined to go into detail about how all this is pulled off or to confirm that State Farm is a client.
He said only that his company “works with insurers and third parties to provide reliable data for the auto insurance market.”
Which third parties? One likely suspect would be Carfax, which provides detailed information about vehicles to paying customers.
A Carfax spokeswoman said that “LexisNexis does not use Carfax as a data source.”
Instead, LexisNexis’ terms and conditions indicate a partnership with Experian, the credit monitoring agency, which has its own Carfax-like service that makes vehicle information available to clients.
An Experian spokesman declined to say whether the company sells its car data to LexisNexis or other data brokers. “We work with a number of third-party organizations to provide vehicle-centric information,” he said.
Stir all this together and it’s a fairly safe bet your driving is being closely monitored by data-collection firms, which in turn sell the information to insurance companies.
Hurwitz’s mileage being shared with his insurer isn’t the end of the world. If his driving doesn’t in fact qualify for a low-mileage discount, so be it.
The more eye-opening aspect of all this is how many times his and other people’s personal information appears to change hands without their knowing it.
In this case it’s your driving habits – the dealer apparently tells a data aggregator such as Experian or Carfax, which tells a data broker such as LexisNexis, which tells State Farm and other insurers.
It could just as easily be the clothes you buy, or the channels you watch, or the websites you frequent.
Keep this in mind the next time you hit the road – especially if you’re driving a newer car with sensors, microphones and other so-called telematics that monitor you when you think you’re enjoying some alone time behind the wheel.
Big Brother isn’t just watching.
He’s in the passenger seat.
ABOUT THE WRITER
David Lazarus, a Los Angeles Times columnist, writes on consumer issues. He can be reached at firstname.lastname@example.org.