These 3 Smartphone Apps Could Raise Your Car Insurance Premiums

Usage-based car insurance has become increasingly common because it enables companies to personalize rates based on a driver's actual history, rather than the demographic factors they usually use. But many consumers remain wary of sharing their driving data with their insurance provider.

These usage-based programs typically require a driver to opt in, but as it turns out, insurance companies may be able to get access to similar data from three apps you might already have on your smartphone.

The three smartphone apps that collect your driving data

A recent New York Times report announced that three popular smartphone apps provide driving data to Arity, an Allstate-owned company that, among other things, can create driving scores insurers can use to offer personalized rates to drivers.

The three apps cited in the article are:

• Life360: This is an app parents can use to keep track of their children's locations.
• GasBuddy: This helps people track gas prices at nearby gas stations and find the best deals.
• MyRadar: This is a weather app that shows details of any inclement weather in your area.

All of these apps collect data on your location, and they can pick up on driving patterns as well. When users join these apps, they consent to sharing this information with Arity in one of those user agreements that practically no one reads.

The Times report doesn't make clear how Arity uses this data, though companies like Life360 have come forward to clarify that it does not share driver data for the purpose of personalized auto insurance quotes without the user specifically opting into this.

Arity itself says it uses the driving data these apps provide to:

• Connect customers to personalized deals from their favorite brands
• Offer driving tips to improve miles per gallon
• Calculate a driver's individual carbon footprint
• Offer suggestions for safer driving routes
• Detect crashes if a driver is in an accident

Some people might find the apps less useful were it not for these features.

How to opt out of sharing data with Arity

Drivers who would prefer to not share their data with Arity should check their app settings and look for an option that says something like "Do Not Sell or Share My Personal Information" to opt out.

Drivers who choose to allow the data sharing probably don't have to worry about it directly affecting their car insurance premiums unless they want it to. Good drivers might see opting in as a way to reduce their auto insurance premiums by reporting their responsible behavior behind the wheel.

But there's always the chance this could backfire. Getting into a car accident or slamming on the brakes to avoid hitting a dog that darted into the road could come back to bite drivers who share their data in exchange for personalized auto insurance quotes. These apps may also not be able to tell whether a person is driving or riding in a car, so another person's reckless behavior behind the wheel could negatively affect those who share driving data with insurers.

Those who want to be rewarded for safe driving behaviors with affordable car insurance are likely better off enrolling in a usage-based program with a top insurer. These typically come with an upfront discount, and safe drivers may qualify for additional savings down the road.