The state of Texas has sued Allstate, alleging that the insurer tracked drivers via their cell phones without permission and exploited the information to support higher auto insurance rates.
With data on more than 45 million Americans, Texas Attorney General Ken Paxton said Allstate developed the "world's largest driving behavior database" by paying mobile app developers millions of dollars to covertly incorporate tracking software.
A complaint lodged in a Texas state court close to Houston claims Allstate sold the data to other companies and used it to reject coverage or hike prices, therefore benefiting it.
Designed starting in 2015 by Allstate's data analytics division Arity, the program was included in apps including Fuel Rewards, GasBuddy, Life360, and Allstate-owned Routely, the complaint claimed.
Texas claimed Allstate had also lately purchased data about the whereabouts of automobiles directly from manufacturers to more precisely identify, not depending just on cellular locations, when policyholders are actually driving.
Allegedly selling this information to Allstate, manufacturers Toyota, Lexus, Mazda, Stellantis' Chrysler, Dodge, Fiat, Jeep, Maserati, and Ram.
Based in Northbrook, Illinois, Allstate did not reply right away for comments.
The lawsuit claims Allstate violates Texas rules controlling data privacy, data brokers, and unfair and misleading practices by insurance companies.
It seeks the eradication of illegally obtained data, consumer restitution, and other damages, as well as civil fines of up to $10,000 per infraction.
Last August, Paxton sued General Motors, alleging that since 2015, more than 14 million vehicles had equipment installed to gather driver data, which Paxton subsequently sold to insurers and other businesses without driver permission.
How Does Texas Suing Allstate Affect Those Insured?
For the insured, this could have significant implications. If the lawsuit succeeds, it may lead to changes in how the insurer operates, ensuring fairer treatment of policyholders. The state might impose fines, mandate corrective actions, or require the company to reevaluate denied claims. Insured individuals could potentially benefit from compensation, policy reforms, or improved claim-handling procedures.
However, during the litigation, there might be temporary disruptions, such as delays in processing claims or increased scrutiny of policies. It's crucial for insured individuals to stay informed about the case, consult legal or insurance experts if needed, and understand their rights to ensure they are adequately protected during and after the legal proceedings.