Allstate: What Their Legal Issues Mean for Policyholders

The data collection lawsuits: What's alleged

In January 2025, Texas became the first state to sue Allstate under its comprehensive privacy law, alleging the insurer and its data analytics subsidiary Arity collected driver location data without proper consent. The lawsuit claims Allstate designed software that was integrated into third-party apps like Life360, GasBuddy, and Sirius XM to harvest driving behavior data without users' knowledge.

According to the Texas Attorney General's office, Allstate collected:

• Real-time geolocation data every 15 seconds 
• Speed, braking patterns, and phone usage while driving 
• Trip start/end times and locations 

This data allegedly helped build "the world's largest driving behavior database" with information on over 45 million Americans. The state alleges this data was used to justify raising insurance premiums for Texas drivers.

Since the Texas lawsuit, class action filings have emerged in the Illinois federal court on behalf of customers in Georgia and California. These lawsuits allege violations of federal wiretap laws, computer fraud statutes, and invasion of privacy.

Allstate's response and defense

Allstate has defended its practices through Arity president Gary Hallgren, who stated last year that partners obtain consent to collect location data to enable driving services like crash detection or fuel efficiency. Hallgren emphasized that insurance companies require a "separate consent process where customers choose to share their driving data with their insurer for a quote."

The company argues that sharing driving data can "meaningfully lower premiums for many" and has expressed hope that insurers would "over-index on transparency and education" to help drivers understand the benefits.

Their financial health and customer base

Despite these legal challenges, Allstate appears financially stable:

• The probability of bankruptcy is currently under 6% 
• The company reported $16.5 billion in Q1 2025 revenue, a 7.8% increase year-over-year 
• 37.9 million policies remain in force across all lines of business 
• The company maintains 25.2 million auto insurance policies specifically 

However, the insurer has faced significant catastrophe losses from weather events, including $184 million in July 2025 alone from 19 wind and hail events. These losses typically lead to premium increases across the industry in affected regions.

What this means for current and prospective policyholders

1. Potential premium impacts

While Allstate's average full coverage premium is $2,927 annually (compared to the national average of $2,285), the outcome of these lawsuits could affect future pricing models. If courts restrict Allstate's ability to use certain data for pricing, the company might need to adjust its risk assessment methods, potentially affecting premiums across its customer base.

2. Data privacy considerations

Customers should review what data they're sharing with insurance apps and understand how it might be used. Allstate's Drivewise program, which offers discounts for safe driving tracked through the Allstate app, is an example of consensual data sharing. However, the lawsuits allege that data was collected without proper disclosure through third-party apps.

3. Shopping for alternatives

With J.D. Power ranking Allstate below average for customer satisfaction in more than half of the US regions, consumers might consider comparing options. However, it's worth noting that many major insurers now use some form of telematics or data-driven pricing, so switching may not completely avoid data collection practices.

4. Understanding your rights

The lawsuits highlight important privacy considerations for insurance consumers. Most states require transparency about data collection and usage. Consumers should:

• Read app permissions carefully before granting location access
• Review privacy policies to understand how data is used and shared
• Opt out of data sharing where possible if uncomfortable with practices

Steps to protect yourself as a consumer

1. Review your policy: Understand what data collection programs you've enrolled in and what permissions you've granted through mobile apps
2. Monitor your premiums: If you notice unexplained rate increases, question your insurer about the factors affecting your pricing
3. Shop around: Compare rates from multiple insurers annually, as loyalty often costs more in the insurance market
4. Understand your rights: State insurance departments can help consumers who believe they're being treated unfairly by insurers

For those concerned about how insurance companies handle claims after an accident, our article on common mistakes insurance companies want you to make offers valuable insights into protecting your interests during the claims process.

Looking ahead: The future of insurance data usage

These lawsuits represent a broader tension between insurance innovation and consumer privacy. Usage-based insurance programs can benefit safe drivers with lower premiums, but they rely on extensive data collection that concerns privacy advocates.

As Texas Attorney General Ken Paxton stated in the lawsuit announcement: "Allstate's alleged covert collection of this data... represents a shocking breach of privacy and trust". The outcome of these cases will likely shape how insurers nationwide can collect and use driver data in the future.

For now, Allstate continues to operate normally while defending against these allegations. The company's financial stability suggests it can weather these legal challenges, but consumers should remain informed about how their data is used and what rights they have regarding insurance pricing and privacy.

For more information on understanding your rights after an accident or dealing with insurance companies, visit our educational resources, and keep up to date by regularly checking our news page.