"For the first time ever, we can now go in as an industry and observe individual driving behavior," says Richard Hutchinson, a general manager with Progressive Insurance.

"Historically, the industry has priced based on modeling, which is more arbitrary than an individualized quote based on one's actual activity," Hutchinson says.

But today, Progressive can put a device in your car that determines how well you drive — tracking if a driver frequently slams on the breaks, for example.

With that data, the company can then determine how much that driver should pay for insurance. Other companies are now following suit.

These kinds of advances are the cutting edge of the business, and companies are even moving from devices that track not just how you drive, but also tell you when you're doing something reckless or dangerous.

Dave Ferrick of Agero, a company that makes these types of in-car devices, says all technologies have trade-offs.

"The analogy I give is when we were all kids," Ferrick says. "If your mother said to you, 'You're going to go out right now [and] I'm going to put this thing in your hand, which [means] at any second I can call you, and you have to pick up the phone,' I would say, 'I don't want it.' "

Just like the cellphone took away some freedoms, Ferrick says, drivers will lose some freedom as technology advances...