Maryland May Put the Brakes on How Auto Insurers Can Collect and Use Telematics Data | Insurify

Maryland lawmakers are targeting usage-based insurance options in order to protect Maryland drivers.

State Sen. Alonzo Washington introduced legislation in January that would regulate how car insurance companies can use driving data and limit the amount of data insurers can collect. Washington's legislation also requires insurers to disclose any telematics use and audit telematics systems, and it prohibits insurers from using telematics data to cancel or non-renew a policy.

To Washington, it's a matter of data privacy.

"While proponents argue that this technology encourages safe driving, the reality is far more complex," he said at a Feb. 3 Finance Committee hearing. "This bill aims to address the critical concerns associated with telematics-based insurance pricing by ensuring consumer protections, preventing rate hikes based on collected data, and upholding privacy rights."

He also hopes the bill ensures drivers are not subject to hidden biases.

"The increases resulting from telematics programs could disproportionately impact low-income individuals and rural residents, who may have longer commutes due to limited public transportation," he said at the hearing.

Proposed regulations draw state support and insurer criticism

Washington wants more checks and balances and said he thinks insurers are using telematics in a way that's not transparent.

Marie Grant, acting insurance commissioner with the Maryland Insurance Association (MIA), supports the legislation, particularly the portion requiring insurers to develop an appeals process.

"We actually see a lot of complaints on this issue," she said. "Folks who are enrolled in telematics programs often have pretty limited abilities to appeal or challenge data with their carrier."

Marta Harding, a representative from State Farm, testified that the current draft of the legislation would essentially prohibit the use of telematics. She pointed out that Maryland already has some regulations to ensure any rate increases are actuarially justified. She added that State Farm is happy to work with legislators to add disclosures or address other concerns.

"We do think this information is highly predictive," she said. "There's very little that's as predictive of future loss as somebody's driving habits, and so it is important information we think insurance companies should be able to take into account, again with full disclosure."

Harding noted that State Farm's Drive Safe & Save program can only benefit the driver, as the insurer doesn't use the data to inform rate increases. Other companies may do it differently, she said, but she maintained that State Farm believes it's appropriate to use the data to inform both rate increases and decreases.

Maryland's high car insurance rates may inform legislation

Maryland drivers face the highest car insurance rates in the country, according to Insurify's auto insurance report. Maryland's average annual cost of full-coverage car insurance reached $4,060 after growing 53% in 2024, per Insurify data. Numerous factors affect the cost of car insurance, but Insurify analysts found surging stolen vehicle claims and legislative changes likely had the most significant effect.

In April, the MIA updated regulations to enforce its requirement for insurers to pay diminished value claims, which is the difference between a car's value before and after an accident. In July, Maryland began requiring insurers to provide enhanced underinsured motorist coverage. Both measures can increase an insurer's financial responsibility, impacting rates for policyholders.

What's next: Other states consider telematics legislation

Multiple states have considered or enacted legislation related to telematics, according to LexisNexis' State Net Insights. Maine, for example, added telematics to its right-to-repair laws in 2023, ensuring vehicle owners can take their cars to any repair facility and authorize access to the mechanical data.

New York lawmakers introduced legislation in 2023 to require that insurers get a driver's consent to collect telematics data and establish how insurers can use or share that data. The assembly didn't take up the legislation, and lawmakers reintroduced it for consideration in February.

If Maryland legislators approve the draft as written, the law would take effect on Oct. 1, 2025.

"No state has explicitly banned insurance companies from using this tool to alter rates, making Maryland a leader in insurance consumer protection if this bill is enacted," Washington said.

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