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A lot of drivers out there don't believe that your insurance company can be linked to your various accounts on social services. Your insurer is unlikely to see your Facebook page, Twitter "tweets," and Bebo pictures and videos. This has definitely been the case up to now. Although the social networking websites have so far not been considered into any premium calculations, the future has a different path. Various insurance firms are starting to look into several social cues about personality traits that indicate high risk drivers.

Below, we'll explain how car insurance companies are using social networking sites, and describe the ways they hope to leverage the information they find. You'll also learn the reason this trend is likely to grow in the future.

Auto Insurers Expand Their Pool Of Data

Auto insurers currently use your driving record, living address, the type of vehicle you drive, and other factors, to calculate your premiums. This information allows them to better predict the chances you'll file a claim in the future. For example, if your driving record is spotless, you're less likely to cause an at-fault collision than someone who has multiple speeding tickets on their record. Likewise, driving a vehicle that has a low claims loss history poses a lower risk of insurance loss than a car with a high claims loss history.

But consider the other types of information that may prove useful to insurance companies. For example, suppose a policyholder is a member of the Facebook groups "Driving Fast" or "Driving While High." Both may indicate behavior behind the wheel that suggests a higher risk of insurance loss. Companies that discover their policyholders are members of such groups may raise their rates, or decline to extend coverage once their contracts expire.

But how far is too far? What types of personal information should be off-limits to insurers? To answer this question, it's worth reviewing how car insurance companies are regulated in their use of information.

The Impact Of Regulations On Insurers

All provinces and territories impose regulations upon insurance companies that limit the types of information they can use when calculating rates. For example, Ontario precludes the use of a person's employment status, credit history, car ownership versus lease agreement, and possession of a credit card. Other provinces have similar regulations in place. This is important to remember as more insurers look online for information about their policyholders.

Even though social networking sites, such as Facebook and Twitter, have been around for years, they represent new territory in the context of collecting data to set rates. Thus, there are few regulations that address them. This is likely to change, but the direction in which it does remains unclear. Will insurance companies be allowed to use photographs on your Facebook account to help determine your rates? Will they be able to "spy" on your accounts in the same way a private investigator photographs people suspected of disability insurance fraud?

These and other questions must be addressed as insurers continue to explore social networking sites to monitor their policyholders. It is likely that every province and territory will handle these issues differently.

Car Insurance Companies Will Increasingly Use Social Media

There are a few obstacles - in addition to regulatory hurdles - for insurers that want to leverage social network sites. For example, it is difficult to identify a given policyholder as the owner of a Twitter or Facebook account. This is especially true for those with common names; there may be hundreds of people on these sites named "Mark Jones."

Second, membership in certain social media groups does not necessarily represent bad driving behavior. That is, how can an insurance company know for certain whether a policyholder in the Facebook group, "Driving Fast," actually drives fast?

As time passes, most and more of these problems will be fixed through various technological advancements. It's very likely that insurance firms will have the power to make various choices regarding coverage and monthly premiums based on what friends you have. The implications are sobering. It's likely that these various social cues will be more and more important as time passes by. If anything, this represents yet another reason to evaluate auto insurers side by side before choosing one that meet your needs.