NEW YORK (MainStreet) — Vehicle-to-vehicle (V2V) communications will not only revolutionize how consumers drive as more cars communicate with each other, it will also speed up the adoption of usage-based insurance (UBI).

As more automobile manufacturers include wireless technology in their vehicles allowing them to communicate to each other and warning drivers of potential hazards, more accidents and injuries could be prevented in the future.

The National Highway Traffic Safety Administration said that this technology could help avoid or mitigate 70% to 80% of vehicle crashes involving unimpaired drivers. The technology only includes information about safety, but does not include exchanging or recording personal information, tracking the movements of the vehicle and does not identify them.

This new technology could benefit consumers because auto insurers would likely give substantial discounts for driving a car with V2V communications capabilities, said senior analyst Laura Adams.

"Customers would potentially have a lot to gain if they are choosing to drive a car with these features and insurance companies may offer substantial discounts to consumers who drive these cars," she said. "If consumers opt for these features, it could really take off. However, the technology needs mass adoption to really affect rates."

While this technology could help lower insurance costs, some consumers are already expressing concerns that it would pose privacy issues and could result in authorities tracking your speed, whether you are following too closely to another car and other movements, Adams said.

The benefits from this cutting edge technology will likely outweigh any privacy issues because the V2V communications will help reduce many crashes and claims and will warn drivers to take preemptive action and could help save many lives each year, she said.

"The technology has worked very well in the real world during tests," Adams said. "There are more pros than cons that can come out of this. Consumers can stay safe and save money if they are willing to give up some information to let people know where they are on the road."

Since UBI is becoming more mainstream, more consumers are considering adopting it in order to save money on insurance premiums. A recent LexisNexis Risk Solutions study found that 50% of consumers are likely to sign up for a 10% discount while 36% would actually change carriers for a 10% discount.

The study also found that 61% of consumers are more likely to accept telematics if insurers offer a trial period for 3 months, while 72% of drivers are more likely to accept if an insurer offers an automatic discount of 10% for the first six months.

Consumers need to be aware of how the data they are releasing will be used since it can have negative implications such as whether your insurance premiums rising without warnings or family members or your boss check up on your driving behavior, said Marilyn Prosch, a W. P. Carey School of Business associate professor at Arizona State University.

"The question of the day is how to manage the data," she said. "I see dangers. The human perspective must not be eliminated. Alerts are good, but can they be managed?"

The information obtained from the technology could harm consumers if their driving habits do not correlate with standard practice, said Prosch, co-founder of Privacy by Design Research Lab, a data privacy lab.

"The obvious assumption is that safe drivers may be rewarded by lower insurance rates," she said. "Will the system in reality reward or penalize safe drivers? For example, what if you're a defensive driver, but you go to parking lots like Costco on Saturdays? Can the system designed to protect the drivers be used to increase their insurance rates?"

The insurance industry will react to driverless cars by retooling their offerings to sell product liability insurance to vehicle manufacturers, said Valerie Raburn, vice president and chief innovation officer of insurance for Xerox, the technology company based in Norwalk, Conn.

Another added benefit is that the concept of a "distracted driver" will cease to exist, which means less accidents and lower insurance rates, she said.

Consumers will no longer buy collision insurance as manufacturers will be solely responsible for damage, Raburn said.

Using the technology does not mean that consumers will have to give up more of their privacy, she said.

"I don't expect that the concerns would be any greater than they are today," Raburn said. "Toll ways currently track the date, time and license plate associated with each vehicle passing through an electronic toll booth and missing persons are often located using signals emitted from their cell phones. In the case of an accident, the data from a driverless vehicle owned by a consumer would only be used by a manufacturer to monitor the vehicle's performance and longevity under certain environmental conditions."

Collision insurance will become a thing of the past as driverless technology is used by the masses.

"With vehicles programmed to stop before striking an object, collisions and collision insurance will virtually disappear," she said. "An owner of a driverless vehicle may only need comprehensive insurance to cover them against losses from theft, floods and the occasional rock hitting the windshield. Vehicle liability insurance will become the responsibility of the product manufacturer and their component vendors; the cost of which will obviously get folded into the price of a driverless vehicle. "

—Written by Ellen Chang for MainStreet