Vehicle Telematics: A Useful Litigation Tool For Attorneys, A Boon To Insurers And The Privacy Concerns Big Data Raises For Us All

September 20, 2014

 

telematic data

Telematics is a broad term that encompasses a wide group of technologies that bring together analytics and mobility and refers to the information gathered about the operation of a motor vehicle, its engine and other mechanical and electronic systems and even the behavior of its operator.  Information gathered by vehicle telematics systems such as General Motors’ OnStar, Ford’s Sync, Toyota’s Entune, BMW’s ConnectedDrive, Honda’s HondaLink and others are attracting increased attention from the courts, the legal community, law enforcement agencies, civil libertarians, the insurance industry and others who see the data as an important litigation tool as well as a way to individualize premiums and in some cases, a threat to individual privacy.

If you’ve bought an automobile in the last ten years, chances are that it has an event data recorder (EDR) or “black box” that has the ability to record your speed, rpm, engine load, temperature, acceleration, braking, steering input, the physics of any collision and other data.  According to published industry sources, 96 percent of all automobiles manufactured for sale in the United States have some sort of digital telematics data recorder, event data recorder or black box. It is a digital recording device that allows the monitoring and recording of telemetric data reflecting activities inside or outside of an automobile.

In addition to recording the performance parameters of modern automobiles and, for that matter, their operators, telematic data is also used to track our position, to tell us how to get where we’re going, to locate shipping containers worldwide, track our overnight deliveries, our credit card purchases and preferences as consumers and summon help for us in an emergency.  Yet despite the widespread use of this technology, many automobile owners are completely unaware of its existence or of its implications at least when it comes to the cars they own and operate every day.

The major automobile manufacturers are at least in part responsible for this.  The owners manual for most cars contains little information about the capabilities of the telematic data device that comes with the car.  Instead, the device is described in the most basic terms with little detail about the technological capabilities or the extent of the information it records or what is done with that data.  But change is on the way.

The Technology Behind Telematics:

How do vehicle black boxes, event data recorders and telematics systems work?  While the capabilities of such data collection systems vary from manufacturer to manufacturer, there are certain characteristics common to most black boxes and event data recorders in use today.  Generally, vehicles are equipped with sensors that record speed, engine throttle, braking, ignition cycle, whether the driver was using a safety belt, airbag deployment, and the physics of crash events including crash speed, change in forward crash speed, maximum change in forward crash speed, time from beginning of crash event at which the maximum change in forward crash speed occurs, the number of crash events, the time between crash events and whether the device completed recording.  Depending upon the automaker, vehicle telematics systems are capable of recording much more.

Event data recorders consist of stacked arrays of memory chips. There are no moving parts therefore reliability is high. With no moving parts, there are fewer maintenance issues and a decreased chance of failure during a crash.  Data from the black box is stored on stacked memory boards inside a crash-survivable memory unit.  Power to operate the device is drawn from the vehicle’s battery and electrical systems.  Most event data recorders are programmed to record data on a continuous loop, writing over information again and again until a vehicle is in a front-end collision or other crash.  When an accident occurs, the device automatically saves up to 5 seconds of data from immediately before, during and after a crash event.

The data is retrieved via either a connection to the vehicle’s on-board diagnostics (OBD) port or the black box or data recorder itself may be removed from the vehicle and the data retrieved directly.  The on-board diagnostics port is the same self-diagnosing and reporting port automotive repair technicians and mechanics use to monitor or diagnose a vehicle’s subsystems.  Downloading the data after an accident requires the use of a specialized data-retrieval tool kit that consists of hardware, software and a special cable that plugs into the car’s onboard diagnostics port. In order to help reinforce the idea that the data is the property of the vehicle owner, there have been proposals for lockable OBD port access panels.

While black boxes and most event data recorders collect and store a few seconds of data immediately before and after a crash event, telematic systems, in addition to giving accurate readings of speed at the time of the crash, location of the accident, and other relevant details, are continuously recording all types of second-by-second data about vehicles and driver behavior sometimes for years at a time.  Telematic technologies collect raw vehicle data and overlay this information with geographic information system mapping data, such as road type and speed limits.  The data is then “broadcast” via data links such as Wi-Fi, GPS, Bluetooth, 3-axis accelerometers, and mobile broadband communications to auto manufacturers, fleet owners, insurance companies and others.  As the cost of enabling mobile broadband communications has fallen automakers are increasingly embedding telematics in vehicles.  Telematic systems are now in an estimated 70 percent of vehicles built since 2011.

Telematics As A Litigation Tool:

Nearly every automobile, light truck, bus, fleet vehicle or light rail vehicle manufactured for sale in the United States is equipped with a black box, event data recorder or other telematics system of some sort.  Even some bicycles come equipped with telematic devices that record a cyclist’s speed, direction, distance traveled and wattage.  In the same way that DNA and other forms of forensic evidence has proven useful, telematic data can be an extremely useful tool in accident reconstruction, product liability, personal injury and other forms of litigation involving motor vehicles and even in divorce and child custody proceedings.  Telematic data, which usually consists of thousands of bits of data, is often more reliable than subjective witness accounts especially when it comes to estimating speed, distance traveled and other key evidence used in reconstructing crash events or in accounting for the whereabouts or behavior of an operator.  Often telematic data can lend credibility to one witness account over another when liability is disputed.  Telematics data can also be utilized to establish both prior and concurrent reckless behavior patterns, such as regular speeding or aggressive or reckless driving patterns.  When used in conjunction with vehicle black boxes, cell phone data and airbag modules telematic data can produce very precise accounts of automobile crashes or other events.

Lawyers must first determine whether the data exists.  Each automaker and insurer uses its own proprietary telemetry or usage based insurance (UBI) programs.  General Motors’ OnStar, Ford’s Sync, Toyota’s Entune, BMW’s ConnectedDrive Honda’s HondaLink, Progressive’s Snapshot, Nationwide’s SmartRide, Allstate’s Drivewise and State Farm’s Drive Safe and Save are all examples of programs used by manufactures and insurers which access and store telematic data.  Once the lawsuit is filed, a request for the data can be made along with a request for any software, templates, platforms, or information needed to interpret the data.  Usually, an expert will also need to be retained who can make sense of and interpret the data and, if necessary, explain the data to the jury at the time of trial.  Automakers, usage based insurers and telematics systems manufacturers need to be prepared to respond to requests for such data from civil litigants, emergency services or law enforcement agencies who have an interest in such data.  According to Automotive News, Ford has confirmed that it has received court orders ‘on behalf of law enforcement or individuals involved in litigation’ to provide data from ‘various vehicle modules’.[1]  Likewise, black boxes are already a factor in lawsuits filed by the families of persons killed and injured in accidents involving GM vehicles allegedly due to defective ignition switches.[2]

Establishing a chain of custody is crucial as an evidentiary matter. “Admissibility turns on evidence of authenticity and expert testimony to explain how the machine operates and to interpret” the data.[3]  Authentication “will depend on the nature and completeness of the data, the complexity of the manipulation, the routineness of the operation, and the verifiability of the result.”[4] It is therefore important to establish: who retrieved the data from the vehicle; how it was retrieved; who downloaded it; and, what was done with the data after it was downloaded.  The absence of a clear chain of custody could lead to admissibility problems due to a failure to ensure that the data hasn’t been corrupted, manipulated or changed.  Employment of an expert early in the case is the best way to ensure chain of custody and integrity of telematics data.

Conversely, telematics systems can also prove to be a distraction to drivers and a safety risk.[5]  While the presence of radios and other systems have always created potentially distracting situations, “evidence is growing that cell phones and other in-vehicle electronic devices are becoming a major source of fatal distraction.”  Some researchers equate the risk of driving while talking on a cell phone to the risk of driving while intoxicated.[6]  The use of integrated devices has not escaped scrutiny either.  Studies “show that ‘hands-free’ operation is not a solution to the problem of cognitive distraction and that other telematic devices such as GPS systems produce similar levels of cognitive distraction.”[7]  Moreover, manufacturers have been aware of the safety problems presented by the distraction caused by such devices for some time and are taking steps to minimize risks, such as designing products that “minimize ‘eyes-off-road and hands-off-wheel time’: . . . designs that ‘reduce the number of steps and complexity to operate any feature’; . . . common design architecture across the board so ‘improvements are driven into all vehicle lines’; and . . . built-in safeguards that limit or disable certain functions while the car is moving.”.[8]

Telematics and the Insurance Industry:

For the insurance industry, telematics means the information that is collected about an insured’s driving patterns. Insurance companies are increasingly recording such information using telematic devices installed in automobiles which allow them to set insurance premiums that reflect the driving style of the motorists they insure.  For insurers, vehicle telematics represent an opportunity to monitor driver behavior and measure risk accordingly.  The basic idea of telematic auto insurance  is that the insured’s driving behavior is monitored in real time and the data is transmitted directly to the insurer.  The insurer then assesses the risk of that driver having an accident based upon the recorded driving behavior and charges insurance premiums accordingly.  A driver who drives responsibly, will be charged a lower premium than a driver who habitually speeds or drives erratically or with less caution.  Telematic devices are currently promoted by a number of automobile insurance underwriters.

Telematic data will likely be used to build next-generation scoring and analytical models used by risk managers.  Telematic data can be used to shorten claims processing and reduce losses but telematics may also be deployed as a decision making tool for insurers.  Using telematic data, underwriting and claims processing have become more closely intertwined.  In the near future, pricing will reflect how a policyholder drives as well as actual driving conditions in addition to many other predictors of risk.  Auto insurance will become increasingly personalized and more cost-effective from the insurer’s point of view and more closely aligned with consumer driving performance.[9]

Large insurers like Progressive, Nationwide, State Farm and Allstate presently use telematic systems to gather data about their customers including speed, braking habits, driving distances and GPS data and provide discounts, if users prove to be less risky than average.  Of course, this data could also be valuable in assigning fault in the event of an accident.  The market for telematics is growing and there exists the possibility that in the future telematic data will be central to the way in which insurers set drivers’ premiums.  This may also mean that those in control of the data and access to it could raise barriers to entry for other insurance providers or new entrants into the market for telematic data.  However, at a minimum, telematics promises to fundamentally change insurance underwriting and claims practices as well as assist with fraud protection and theft prevention.[10]

Telematics and Privacy:

Telematic data may include personal data, and therefore be subject to data protection laws, on the grounds that it records sensitive personal identifying information.  Privacy advocates point out that the problem with telematic systems is that they gather information continuously and cannot be turned off.  Likewise, as reliance on telematic devices becomes greater by insurers, drivers may one day be faced with the difficult choice between obtaining affordable insurance and surrendering their right to privacy.  Clearly, the legal system is just beginning to grapple with the privacy concerns posed by telematics.[11]

The Supreme Court’s recent landmark rulings on digital privacy in U.S. v. Wurie[12] and Riley v. California[13], where the court unanimously held that police are required to obtain a search warrant before searching data on smartphones provides significant guidance on how the courts may handle this dilemma. These rulings reinforce the idea that the Constitution protects people (and, by extension, their information) rather than places. The court clearly appreciates the range of digital technology and the difference it makes in terms of the “pervasiveness” (to use the court’s word) of digital searches, in view of the storage capacity of modern devices.

As Roberts writes, comparing digital with physical media, “Most people cannot [physically] lug around every piece of mail they’ve received for the past several months, every book or article they have read,” but they can do just that with cell-phone data. (If people did attempt to treat physical communications that way, they’d need a container of the sort that’s been previously held to require a search warrant.)  These rulings continue the evolution in Fourth Amendment jurisprudence that increasingly decouples legal tests about search and privacy from a focus on physical objects and places, and instead taking greater account of information.[14]  One could surely draw a comparison technologically speaking in that as far as data collection is concerned, today’s automobile is little more than a smartphone or personal digital assistant with wheels.

However, the area of telematic data, which is broadcast over enabling technologies such as Wi-Fi, GPS, Bluetooth and mobile broadband communications, is less settled.  Clearly, when personal information is voluntarily given over to automakers or insurers, there is less of an expectation of privacy.  The privacy terms for BMW’s ConnectedDrive’s Assist states it may “collect and retain an electronic or other record” of a person’s location or direction of travel at a given time.  OnStar said it “complies with its legal obligation to court orders or subpoenas” but doesn’t “share data with law enforcement absent a court order unless it is necessary to protect the safety of its customers or others.” OnStar does provide data to police in cases of stolen cars and can cut off a car’s power.  Ford has said that its Sync program doesn’t track or transmit data continuously from a vehicle and that no data is transmitted from the vehicle without the customer’s consent.  “Location data is only shared with our partners when necessary to fulfill the services requested by the customer” Ford said.  So, “caveat emptor” or buyer beware.  While customers enjoy the convenience and safety afforded by such systems, they may be getting more than they bargain for when signing up to participate.

With the collection and commoditization of personal data increasing, data protection will become increasingly important.  The key in such cases may be whether the release of the data was voluntary or the degree to which the consumer has been informed about the collection of such data and the use to which it potentially may be put and consented to its collection and dissemination.  Presently, automakers, insurers and technology providers routinely share such data often after it has been aggregated provided identifying information has been removed and the data has been “anonymized” but safeguards for consumers are few.  This has given rise to movements amongst privacy advocates to disable such devices or block the transmission of the data and legislative initiatives both state and federal to protect consumers.

Federal and State Regulation of Telematic Data:

The National Highway Safety Administration issued a rule in August of 2006 requiring automakers to tell new car buyers if an event data recorder was installed beginning with model year 2011 and has announced that it will make black boxes mandatory in all automobiles sold in the United States.  Six states considered legislation on these devices in 2009 and 2010, but only Washington enacted a law.[15]  In all, at least 15 states including New York,[16] Minnesota,[17] Pennsylvania,[18] South Carolina,[19] Utah[20] and Delaware[21] have considered or enacted laws requiring automakers to disclose what information the devices record, who has access to the data and under what circumstances.

Black boxes have become a battleground in states such as California, where earlier this year, insurance companies and automakers opposed each other over a black bo x data protection bill that would have required automakers to permit auto owners to disable telematic devices or block the recording of vehicle and driver information. The bill failed to pass the state Senate Transportation Committee after industry lobbying heavyweights including the Alliance of Automobile Manufacturers opposed it.  Earlier in 2014, two U.S. senators introduced a bipartisan bill in the Senate that would provide some of the same protections on a national level. The Driver Privacy Act explicitly provides that telematic data may not be retrieved without the consent of the vehicle’s owner and protects all personally identifiable information.  By April 2014, the bill had collected 23 co-sponsors and had been approved by the Senate Commerce Committee.  But, as of August 2014, no further action had been taken.

In 2011 Massachusetts conducted hearings on a bill regulating the use of recording devices in motor vehicles for the purpose of retrieving data after an accident which imposed duties on manufacturers and dealers, regulated the use of and access to such data and prohibiting an insurer or lessor of a motor vehicle from providing written permission for the access or retrieval of telematics from a motor vehicle event data recorder as a condition of the policy or lease but the bill did not pass.[22]  In 2013 Massachusetts considered a bill that would permit insurers to use telematics in the setting rates for automobile insurance policies.[23]

Conclusion:

While created with good intentions such as providing navigational guidance, summoning help in emergencies and obtaining usage based affordable insurance discounts, telematic data and especially the aggregation of such data presents formidable privacy challenges for consumers, the courts, law enforcement, automakers, insurers and the telematics industry.  Thus, while telematic data is undoubtedly a useful tool in the courtroom and to the accident reconstructionist, law enforcement agencies would be well advised to have a warrant before deciding to interrogate the black box of a suspect’s vehicle or obtaining telematic data from technology providers and the insurance industry should be concerned about protecting the privacy of the individual data they collect and share.

[1] Automotive News, September 14, 2014.

[2] See also, Potential Uses of Telematics Data In Personal Injury Cases, Bilton, Corey, November 25, 2013.

[3] McCormack on Evidence, §204B.

[4] Id., at §227.

[5] In 2002, a $10 million settlement was reported in a case in which cellular phone use by a driver contributed to an accident that left the plaintiff with catastrophic brain injuries. Carroll, by his guardian Ward v. Gebreyal, 2002 National Jury Review and Analysis.

[6] “The Trouble With Telematics: The Uneasy Marriage of Wireless Technology and Automobiles,” 69 UMKC L.Rev. 845, 847 (2001) at 846.

[7] Id. at 847.

[8] Id. at 852-53.  See also, Drivers With Telematic Equipment, The Risks, Jay Harris and Diane Bernoff Sher, at 2.

[9] Several commentators have written about the transformative effect telematics will have on insurance risk management management.  See, Insurance Telematics, What Is It And Why Should we Care? Verisk Analytics, By Dwight Hakim; Usage Based Insurance and Telematics,  National Association of Insurance Commissioners, and the Center for Insurance Policy Research, July 18, 2014; Telematics, How Big Data Is Transforming the Insurance Industry, SAS White Paper by Stuart Rose, SAS Global Insurance Marketing Director;

[10] Vehicle Telematics, Risk Management At Every Turn, The National Law Review, September 22, 2014.

[11] Privacy Concerns Over Vehicle Telematics Heat Up, Bond, Vince, Jr., Crane’s Detroit Business, September 14, 2014.

[12] U.S. v. Wurie, 573 U.S. ___ (2014) decided June 25, 2014.

[13] Riley v. California 573 U.S. ___ (2014) decided June 25, 2014.

[14] Private Castles in the Cloud, Abelson, Hal, MIT Technology Review June 26, 2014.

[15] 2009 S.B. 5574 STATUS: May 14, 2009; Chapter No. 485 Requires a manufacturer of a motor vehicle equipped with a recording devices to disclose in the owner’s manual that the vehicle is equipped with such a device; requires disclosure of the type of data recorded and whether the device has the ability to transmit information to another device; prohibits the unlawful disclosure of information recorded by such devices; requires that manufacturers make commercially available tools to access information on such devices.

[16] A.B. 803 STATUS: Jan. 9, 2013; To Assembly Committee on Insurance. Permits non-commercial private passenger car insurance to provide for an actuarially appropriate reduction in premium for cars with automotive monitoring devices.

S.B. 2001 STATUS: Jan. 9, 2013; To Senate Committee on Insurance Amends the Insurance Law; requires any schedule or rating plan for non-commercial private passenger automobile insurance to provide for an actuarially appropriate reduction in premium charges for bodily injury liability, property damage liability, personal injury protection, medical payments and collision coverage with respect to automobiles equipped with an automotive safety monitoring device for parental monitoring of drivers under the age of 22.

S.B. 3460 STATUS: Feb. 4, 2013; To Senate Committee on Transportation Enacts the Livery and Taxi Safety Act; provides for a personal income and business franchise black box tax credit; authorizes a reduction in certain insurance premiums for insureds who have installed a black box.

2011 A.B. 1870 STATUS: January 12, 2011, To Assembly Committee on Transportation. Provides that motor vehicles manufactured after December 31, 2011 and operated in New York state shall be equipped with an event data recorder.

2009 A.B. 690 STATUS: Did not pass. Requires that motor vehicles manufactured after Dec. 31, 2004 and operated in New York be equipped with an event data recorder.

2009 A.B. 3059 STATUS: Feb. 6, 2009; enacting clause stricken. Requires use of event data recorders in motor vehicles to reconstruct accident scenes; requires salesperson to inform purchasers orally and in writing that an event data recorder is on board; makes tampering with, disabling, or removal of these devices a misdemeanor; allows the use of this information in actions or proceedings involving motor vehicle crashes or crime scenes.

[17] H.B. 723 STATUS: Feb. 20, 2013; To House Committee on Civil Law. Relates to privacy; establishes standards for use of data collected by an event data recorder.

[18] H.B. 879 STATUS: March 11, 2013; To House Committee on Transportation. Provides for notice of motor vehicle event data recorders and for information retrieval; imposes penalties; provides for evidentiary rules.

S.B. 678 STATUS: March 15, 2013; To Senate Committee on Transportation. Provides for notice of motor vehicle event data recorders and for information retrieval; imposes penalties; provides for evidentiary rules.

2011 H.B. 1534 STATUS: May 11, 2011, To House Committee on Transportation. Provides for notice of motor vehicle event data recorders and for information retrieval; requires disclosures by the manufacturer or a new motor vehicle; imposes penalties; provides for evidentiary rules in any civil, criminal or administrative action.

2009 H.B. 1112 STATUS: Did not pass. Requires buyers to be notified of motor vehicle event data recorders and their uses. Imposes penalties. Provides for evidentiary rules. Provides that if a motor vehicle event recorder is installed as part of a subscription service, the subscription service agreement must disclose that the device may record or transmit information to be used in legal proceedings.

2010 S.B. 1412 STATUS: Did not pass. Requires buyers to be notified of motor vehicle event data recorders and their uses. Imposes penalties. Provides for evidentiary rules. Provides that if a motor vehicle event recorder is installed as part of a subscription service, the subscription service agreement must disclose that the device may record or transmit information to be used in legal proceedings.

[19] H.B. 3318 STATUS: Jan. 15, 2013; To House Committee on Labor Commerce and Industry. Provides that a manufacturer of a new motor vehicle that is sold or leased in this state which is equipped with an event data recorder or a sensing and diagnostic module shall disclose this information in the motor vehicle’s owner’s manual and on its window sticker; provides that a company that rents a motor vehicle that is equipped with this device must disclose its existence in the company’s rental agreement; provides a definition for the term recording device; restricts the use of certain data obtained.

[20] H.B. 127 STATUS: April 26, 2013; Chaptered. Chapter No. 189 Relates to event data recorders in motor vehicles; provides event data recorded on an event data recorder is the personal information of the owner; requires disclosure of such recorder in the subscription service agreement and may be retrieved by the service provider; provides the recorder does not become the property of an insurer following an accident; provides the recorder is not become the property of a new owner just because of new ownership; prohibits information retrieval by an insurer or lessor.

[21] Delaware Title 18, Chapter 39, Sec. 3918.

[22] 2011 H.B. 1816 STATUS: June 14, 2011, In Joint Committee on Transportation: Heard. Eligible for Executive Session. Relates to regulating the use of recording devices in motor vehicles for the purpose of retrieving data after an accident; defines terms; imposes duties on manufacturers and dealers; specifies ownership and permitted use of and access to data; prohibits an insurer or lessor of a motor vehicle from providing written permission for the access or retrieval of information from a motor vehicle event data recorder as a condition of the policy or lease.

[23] S.B.420 Relates to the setting of rates for automobile insurance policies. Provides that motor vehicle insurance premium charges shall be determined solely by application of any combination of factors which primarily are user-controllable and are directly related to the operation of a motor vehicle, including the use of telematics (e.g., so-called “black boxes” that record a driver’s operation of the vehicle).

 

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