I had the honor of presenting with a friend and former colleague at the Insurance Telematics USA 2011 conference in Chicago. A large focus of the conference pertained to using event data recorder (EDR) and onboard diagnostic port (OBD II) devices to gather driving-habit data to more accurately underwrite risk.

Several presentations (including ours) related to using telematics to determine liability. This topic proved to be the buzz of the conference. Even during breaks, I joined in several discussions and was surprised at many insurers' comments. Having come from a claims background, I asked several insurance-carrier representatives if they had a claim policy for obtaining permission to extract and use EDR or "black box" information in their claims handling. Not many knew of such a policy and most were handling it on a case-by-case basis.

The flaw with this approach is that by the time the severity of the claim is known and the presence of an EDR is verified, the chain of custody of the vehicle and that information may have become murky, and the evidence can then be challenged as inadmissible. This is especially concerning given recent data from the Association of Trial Lawyers indicating that the odds of at least one vehicle in a severe accident having harvestable accident data are about two in three. While even today not all vehicles have EDRs (notably German and many Japanese vehicles do not have harvestable EDRs), the majority of 2005 and newer vehicles will be equipped with them. 

The National Highway Traffic Safety Administration has proposed rules around standardizing use of EDRs, and Senator Jay Rockefeller, D-WV, introduced legislation this year to require an EDR in all vehicles sold in the U.S. by 2015—so we as an industry should address the issue now. Currently 37 states do not have any regulations granting permission and admissibility of EDR data in claims settlement, but the remaining 13 do.

So I pose the following questions: Do you know which states have regulations? Does your company have a state-specific handling procedure to identify a potential vehicle with an EDR; put steps in place to preserve the evidentiary chain; and harvest and interpret the data?

Statements and opinions expressed in this blog are solely those of the author.  They are not offered as and do not constitute legal advice or opinion of Mitchell International Inc.

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