Don's Discussion

Are you a member with a question? Contact IA&B Legal & Corporate Affairs Director Don Bankus at 717-918-9204 or DonB@IABforME.com

QUESTION:

Can carriers use telematics data collected from insureds for purposes of claims investigation and settlement?

ANSWER:

The extent to which carriers can use data collected via telematics devices is primarily governed by two things: 1) the language in the respective states’ statutes, if any, and 2) the contract between the insured and the carrier outlining the terms and conditions of use of the telematic device.

As you know, for insureds who elect to use them, telematics devices – such as Travelers’ IntelliDrive, Safeco’s RightTrack, and Progressive’s Snapshot –measure several elements of interest to carriers (miles driven; time of day; the location of the vehicle; rapid acceleration; and hard braking and cornering). It’s argued such usage-based information makes premium pricing more individualized, rather than relying on aggregated statistics and driving records based on past trends and events.

WHAT DO THE USER AGREEMENTS SAY ABOUT CLAIMS?

A review of several carriers’ telematics device agreements reveals that most, but not all, include language expressly addressing the use of the data for claims purposes. The following excerpts represent examples:

▲ Travelers IntelliDrive (March, 2023, IntelliDrive End User License Agreement):  Section 8. Monitoring; Analysis (Excerpt):  Travelers may use such data for premium calculation, claim services [emphasis added] and research purposes. If we provide data to you or a third party, whether pursuant to a legal obligation or otherwise, we may use that data in connection with the reasons for which it was disclosed, to protect our and our affiliates’ interests, for claim adjudication [emphasis added], and any other purpose. We will not disclose information to 3rd parties except as permitted by the Privacy Policy.

▲ Progressive Snapshot (March, 2022, Snapshot Plug-in Device Terms & Conditions): Acknowledgement/Vehicle Owner Consent (Excerpt): You agree we may analyze Snapshot Data for detecting whether an accident may have occurred and offering assistance to you at the scene. In the event you have an insurance claim with us, you agree we may use Snapshot Data to assist in resolving the claim [emphasis added]. This may include, but is not necessarily limited to, validating the circumstances of the accident, such as date and time of loss and crash location; making liability and coverage determinations [emphasis added], and conducting investigations or policy and/or claims fraud and material misrepresentation; and any potential subrogation or litigation involving the claim.

STATUTES AND REGULATIONS

Of our three states (Pennsylvania, Maryland & Delaware), only Delaware has a statute which addresses use of telematics data collected by carriers. Since the statute does not expressly address the use of data for claims purposes, it therefore does not prohibit the use of data for claims purposes (See 18 DE Code, Section 3918 –Vehicle data-reporting device). Delaware’s statute requires consent of the insured for purposes of data collection and use.

In 2020, Maryland’s General Assembly introduced legislation, which, among other things, would have expressly allowed for use of collected data for claims investigation. However, the legislation was not passed into law. (See MD HB 267 of 2020.)

Pennsylvania does not presently have any statute or pending legislation which addresses the issue. Given there are no statutory prohibitions in either Maryland or Pennsylvania, the agreement between the insured and the carrier would govern the issue.

THE BOTTOM LINE

If the agreement between the insured and carrier permits use of collected data for claims purposes, and there are no state statutes or regulations which prohibit it, then the use of collected data for such purposes would be permissible.

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