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Basil Enan is the CEO and founder of CoverHound.

To car insurance companies, you’re a number. My number is $720.90. That’s what I pay every 6 months for my car insurance policy.

That’s my number because my insurance company has decided that a large group of people very similar to me would likely cost them about 70 percent of that in losses and that it would cost about 30 percent of that to administer our policy.

Seventy percent + 30 percent = 100 percent, so most insurance companies really only make a small profit on the interest they earn on your money before they give it back to you or to someone you injure.

How does this all relate to social media?

Well, unless your insurance company does a great job determining your premium, they are likely to lose a lot of money on you because there’s not much margin for error. And they could do a better job determining your premium if they had extra information about you — say, how much you drive and who else regularly drives your car.

That’s where your social media profile and activity can start to get interesting.

I’m not saying your insurance company is necessarily checking out your Facebook profile today to help price your policy, but that’s definitely coming.

Here’s how it will work:

My insurance company will offer me a small discount for connecting on Facebook (Esurance already offers a “Like” discount in Arizona and Texas). Now that I’m connected with them via Facebook, they have access to lots of important data points. Let’s look at how they might use a couple of these.

Annual Mileage

Even my public profile shows that I live in Menlo Park and work at CoverHound (based in San Francisco). That’s a 30 mile commute each way, or about 15,000 miles a year.

All else being equal, I pay $200 more per year for my car insurance because I drive 60 miles a day than I would if I halved my daily commute.

It’s very common for people to underestimate how much they drive every year, so insurance companies have a big interest in accurate mileage, and your social media profile can offer clues to help them get it right.

Undisclosed Drivers

My insurance company would also be able to see that I’ve been married since 2007.

That’s important for them to know because, while your car insurance policy primarily covers you driving your car, it also covers other people when they drive your car.

A big challenge for car insurance companies is that people often don’t list (either intentionally or because they don’t know they should) everyone who frequently drives their car and thus should be covered under their policy.

If your profile states that you’ve been in a relationship with someone for several years and that person isn’t listed on your policy, it could raise a red flag. What if you have a clean driving record but that other person who often uses your car has three at-fault accidents in as many years? If that riskier driver isn’t on your policy, then you’re paying way less than you should. Not good for your insurance company.

In fact, car insurance companies already spend millions on services that help them identify “undisclosed drivers” by mining DMV and other publically available data sources.

Getting some of that data for free from your social media profile is sure to be an attractive option.

That’s just the beginning

It’s easy to see why the data in your social media profiles would be interesting to car insurance companies but, more troublingly, the content of your posts, your tweets, and your checkins could also be used in the future, not just for determining how much you pay but also for assigning fault in the case of an accident or reducing fraudulent claims.

If you check in at a bar at 2 a.m. and then are involved in a car accident a couple of hours later, it’s likely your insurance company would use that checkin as a consideration when determining fault.

If you posted a picture of you and your new sports car at the local raceway and then file a claim the next day that your car was damaged while parked safely in your driveway, you’re likely to get some extra scrutiny from your insurance company before they write you a check.

Having your insurance company gathering data on your from social media sites is probably concerning, but it’s really just a natural extension of what’s already going on: When you buy a policy, they’re already basing your rate on your credit score (Californians are spared from this by law), your Motor Vehicle Report from the DMV, and lots of other data points they have access to from other sources.

But this is yet another reminder that you should be thoughtful about what you do on social media sites and how widely you make those profiles available to others.

Basil EnanBasil Enan is the CEO and founder of CoverHound. Prior to founding CoverHound, Basil served as the VP of business development for InsWeb, an early pioneer in the online insurance space.

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