Let's say you're a pretty safe driver. You've had few, if any, accidents over the years, no moving violations, and you pretty much stick to the speed limit on the highway. That in itself should earn you the lowest possible rate on auto insurance, right?

Not so fast. The automotive insurance industry has turned to telematics, the integrated use of telecommunications and vehicle data, to decide who gets the best rates. If you're not playing this game with them — allowing them to gauge your every moment in the car — you probably won't the get lowest rate possible. In other words, if you value your privacy, you may be paying a penalty.

A few years back, some insurance companies began monitoring programs, in which drivers volunteered to install small wireless monitors to their cars' diagnostic ports. This allowed the drivers to get “safe-driving” discounts that drivers who did not opt in did not enjoy. Insurers claimed they began these programs to move beyond the old algorithms they had used to gauge the chance that a particular driver would have an accident or report a claim. Those factors included age, place, marital status, mileage, accident history, and even credit scores.

But there were problems with using such demographic factors. Critics said that they unfairly penalized women, urban dwellers and the poor. So the insurance companies attempted to level the playing field by offering monitoring devices, which they said would be the basis of individualized insurance policies, known in the industry as user-based insurance, or UBI.

Four years ago, Progressive Auto Insurance rolled out its UBI service, Snapshot, which they said would not penalize drivers who were found to be less cautious behind the wheel. While the customers who demonstrated ideal driving practices, times and distances received discounts as much as 30%, only a little over half of the drivers who opted for Snapshot qualified for discounts. Among all drivers who opted in, the average discount was about 10%.

The monitor, typically a little bigger than a box of matches, connects to a car’s computer system through the diagnostic port that's found in all cars manufactured since 1996. Many of the larger car insurers, such as Allstate, State Farm and Progressive, offer the devices, which automatically send driving results to the insurers. (Geico and USAA do not yet offer the programs.)

What these devices measure and how the data are weighed varies by insurer, but most record when and where the car is driven, the distance, hard cornering, air-bag deployment, and vehicle speed measured second-by-second. The last measurement not only measures the possible presence of speeding, it also measures incidents of hard or extreme braking and “jackrabbit” starts, which may show an impatient or aggressive driver.

Many systems use continual GPS tracking of vehicles, which some consumers believe infringes on their privacy. However, some insurance industry experts say this tracking is only akin to the “checking in” people already do on social media sites such as Four Square and Facebook.

David Marlett, a professor of insurance at Appalachian State University in North Carolina told the consumer site Nerd Wallet, “Many people appear to be comfortable with sharing location and their personal information through social media, so this isn’t really much different.”

Besides, notes Marlett, the insurance companies are already tracking you: “Many insurers already use social media in their underwriting and claims investigations without consumer consent.”

Despite the privacy concerns, the insurance industry touts the benefits of GPS telematics, claiming that continual tracking enhances both personal and vehicle security. The same technology, it says, can be used to find a car's whereabouts after an accident, breakdown or theft.

However, the feedback these devices give the insurance companies doesn't actually show whether you're a good driver. Some devices may be blind to the road a driver is on, not knowing whether the driver is going 70mph in a 70mph zone or a 40mph zone. It also can't decide whether high rates of hard braking and acceleration are because of aggressive driving or difficult traffic situations. Moreover, since the devices check the time of day the car is used, they may penalize those who work odd-hour and overnight shifts. Allstate even says that the highest risk times to drive are late nights to early morning hours.

Besides creating usage-based insurance rates, these monitors also create colossal amounts of data. And while that information is proprietary and probably being actively parsed by the insurance companies, some critics believe that eventually this data can be used to draw comparisons among all drivers and after it is input into an industry-wide analytical database, similar to how the banks and credit companies feed financial information into FICO to decide an individual's credit score. So, it's plausible that soon, drivers shopping for automotive insurance will have a score attached to them, regardless of whether they've changed their driving habits, the distance they drive, or the hours.

“I don’t see how it doesn’t happen,” David Lukens, director of vertical markets at Lexis Nexis Risk Solutions told the New York Times last week. “There will be a tipping point where if most companies have this data, they’re going to weigh the costs and benefits of sharing it.”

On the other hand, if the insurance companies decide not to share the information through a centralized database, this could dissuade drivers who have received discounts to leave for a different insurance plan, as other companies wouldn't be privy to their excellent “score.”

All in all, critics of driver monitoring systems and UBI say that consumers may not be aware how it infringes on their privacy rights.

Suzanne Ganier, an expert in insurance litigation, told Nerd Wallet that while the collection of tracking information has valid uses, the way the information is being used needs additional investigation. One of Ganier's biggest concerns is that insurance companies could use the systems to discriminate by the places the car has been or where it resides. Thus, where a car drives or parks can decide the rates a driver might pay. If a vehicle is kept in an area with a high crime rate, what's to stop insurance companies from using these results to charge more?

“Unless the carriers provide full disclosure,” Ganier says, “there may indeed be a privacy law issue, even with an opt-in.”â€‹