Here's a great article from the Times magazine about how auto insurance is mispriced.  The basic premise is that people who drive 100 miles/day pay the same price for auto insurance as the people who drive 10 miles/day (all else equal).  The people who drive 100 miles/day are more risky drivers and therefore, should pay more for insurance.

A more equitable pricing scheme would charge drivers based on how many miles they drive and how they drive those miles. Believe it or not, Progressive is planning to roll out this system very soon. The plan would involve placing a wireless transmitter in your car that would transmit to Progressive how many miles you drive, when you drive them, and how you drive them (acceleration patterns, braking behavior, etc.).

I'm all for more equitable pricing, but the "big brother" characteristics of this program are almost overwhelming. I think I'm fine with the insurance company knowing how many miles I drive, but I'm much more reluctant to allow them to measure how I drive those miles. That said, there's a price for everything. If the savings were high enough, I'd let Progressive set up a camera in my bathroom if they wanted to. So the question is, what's your price?  How much would you have to save per year to let your insurance company track your every move?

It'll be interesting to see if this type of pricing becomes more popular over time - because it's really all dependent on the value drivers put on the "privacy" of their driving habits.