Would you let an insurer put a GPS device in your car to monitor your driving in exchange for potentially lower rates on your auto insurance? State Farm is betting you will.

From Paul Eng of Consumer Reports’ Cars Blog:

The In-Drive service, a joint effort with Hughes Telematics, is like a mash-up of OnStar’s aftermarket offering and Progressive Insurance’s Snapshot. A small device plugs into the diagnostic port of any car made after 1995 and a communication device can be attached to the car’s visor. Together, the add-ons allow drivers to access emergency roadside assistance, vehicle diagnostics, and maintenance reminders.

While it doesn’t offer in-vehicle navigation or mobile phone calling, the In-Drive pricing seems attractive. Service is free—after a $10 activation fee—for the first six months. After that, monthly fees are just $5 to $15, depending on the type of services desired.

However, if In-Drive subscribers opt-in to link the service to State Farm’s Drive Safe & Save vehicle insurance program, they may save roughly 10 percent on liability, medical payments, collision, and comprehensive coverages. And according to State Farm’s press release, “the discount may increase up to 50 percent.” The catch: State Farm accesses In-Drive data — vehicle mileage, speed, and braking performance — to determine when and how policy holders drive.

A lot of this is good stuff. I think it makes a lot of sense for insurance companies to give customers a tool that would help them get a disabled car off the side of the road or make sure that crucial safety systems are well-maintained. Not only would these services probably reduce claims, but they could also keep customers safe and prevent a lot of needless crashes.

What I’m less comfortable with is the idea of allowing an insurance company to put a GPS monitoring system in a consumer’s car. Sure, that 10 percent discount may sound great, but what if your rate eventually goes up because the insurance company looks at its records and begins to suspect you’re a riskier driver than they thought?

I’m sure some percentage of people will read this and think, “Well, if you’re a good driver, you have nothing to worry about.”

That may be true, but Americans are notoriously bad at judging their own driving ability. A recent study commissioned by Allstate found nearly two-thirds of Americans considered themselves “excellent” or “very good drivers.” If you think that’s even close to accurate, the drivers in your area must be a cut above those anywhere I’ve ever lived.

I think it’s likely that a lot of people who sign up for this service will erroneously assume their driving habits match up with an insurance company’s idea of a low-risk driver’s, only to end up facing rate hikes over everything from speeding to exceeding annual mileage limits.

This week Allstate released a national survey that found nearly 90 percent of U.S. drivers admit to speeding, and 40 percent say they’ve driven more than 20 miles over the speed limit. Some other stats from the survey:

  • Almost half (45 percent) say they have driven while excessively tired – to the point of almost falling asleep.
  • Fifteen percent say they have driven while intoxicated, with men almost four times more likely than women to have done so (23 percent of men versus six percent of women).
  • More than one-third (34 percent) have sent a text-message or email while driving, but the prevalence of the practice changes by age group. Those 18-29 years of age are the most likely to text while driving (63 percent) with drivers ages 30-44 not far behind (58 percent). Texting while driving decreases with older age groups; only 25 percent of those 45-54, six percent of those 55-64, and two percent of those over 65 admit to the practice.

Does that sound like a population that should really be willing to submit to constant, unfettered monitoring of their driving habits?

Now you could argue that Americans might become better, safer drivers if they were being monitored and punished with higher rates when they made questionable driving choices. But would I recommend an individual to sign up for such a service? Probably not.

What do you think? Would you be willing to let your insurance company monitor your driving in exchange for a 10 percent discount?