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Claims & Coverage: Telematics a growing issue in insurance law

The evolution of technology is rapidly affecting how insurers are underwriting policies and settling claims as telematics help blend computers with wireless communication.  

Car owners may not realize that their vehicle likely uses telematics via an airbag control module or a motor vehicle event data recorder, also known as a black box.

General Motors and Ford have been putting black boxes in new cars since 2000. The original intended purpose of the data recorder was for diagnosis of mechanical issues; however, insurers now use the data for underwriting and claims purposes in the United States and, increasingly, in Canada.

The U.S. courts have embraced telematics. In a notorious 2011 case, Massachusetts Lieut.-Gov. Tim Murray crashed a government-owned vehicle, claiming to have lost control when he braked on some ice and denying that he’d been speeding. The car’s data, however, showed he was travelling at 174 kilometres an hour and suddenly accelerated just before his car flipped over. There were no witnesses. The charges laid against him were solely a result of the information from the event data recorder.

Uconnect is an Internet-connected computer featured in hundreds of thousands of vehicles. The problem is that anybody who knows a car’s Internet protocol address can gain access from anywhere, a fact that came to light in July when a journalist arranged for two hackers to take over the jeep he was driving. While he driving down a highway, the hackers remotely toyed with the air conditioning, radio, and windshield wipers. But when the jeep suddenly slowed to a crawl with a large truck just behind it, the fun was over. The hackers subsequently worked with Chrysler to develop solutions to the vulnerability.

Our criminal courts recently dealt with such data in R. v. Glenfield. Following a fatal motor vehicle collision, an investigating officer at the crash scene connected to the vehicle’s event data recorder and downloaded information on speed, braking, and accelerator position. He moved quickly to capture the data, believing that when the vehicle was towed, the jostling would activate the recorder and erase the information. He didn’t have a warrant nor consent from the defendant. The court found a breach of the defendant’s rights under s. 8 of the Charter of Rights and Freedoms but it admitted the evidence because the privacy interest at stake was minimal.

Courts are likely to consider data from motor vehicle event data recorders to be relevant and admissible evidence at civil personal injury trials. As such, counsel should begin considering how to gain access to the data for the purpose of a liability dispute. It seems clear, however, that regulation will be necessary with respect to the use of it. Regulations should also mandate some built-in protection for Internet-connected vehicles for car manufacturers.

One obvious use of telematics is to locate a stolen vehicle quickly. Some Canadian auto insurers will offer a lower premium to those who agree to provide black-box data such as the frequency of short stops and fast starts and where and how often they’re driving. We’re collectively moving in the direction of technology opening up more aspects of our lives to insurance companies, but underwriting has always required personal data in order to establish premiums fairly. Claims investigations have always elicited personal information but just not in digital form. Overall, technology will likely transform motor vehicle litigation as we know it.

The trucking industry has begun to use telematics for both underwriting fleet policies and adjusting liability claims. Although Canada’s privacy laws prevent companies from tracking individual drivers without specific consent, it has become common in the United States for fleets and insurers to use information about driver behaviour to alert fleet managers to unsafe driving and for training purposes.

According to Truck News, “Canada is late to the party, but globally, the automobile insurance industry is already moving towards the utilization of telematics.”

Insurers and the vehicle manufacturing and trucking industries won’t want to fall behind.

Chella Turnbull, a lawyer practising personal injury litigation at Zuber & Co. LLP, is available at 416-646-3129 or cturnbull@zubco.com.

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