Texas Sues Allstate Over Driver Data: What It Means for You

Autor: Shelby Benavidez   

Abogado colaborador: Heather Diehl, attorney  

In January 2025, the State of Texas filed a lawsuit against Allstate Insurance, one of America’s largest insurers, and Arity, a data and analytics company owned by Allstate. The case has raised a lot of questions for consumers: how much should companies be allowed to learn about us from our phones and cars, and what can they do with that information?  

Texas says that Allstate and Arity secretly gathered detailed driving data on millions of people through their phone apps and vehicles, then used it to charge people more for their insurance. Allstate claims that they were not in the wrong.  

Even if you don’t have Allstate, you should pay close attention to this case. Regardless of whether you’ve ever had to file a claim or switched insurers, the outcome could set rules for how companies must explain data collection, get consent, and treat people fairly in the age of connected devices.  

Allstate Driver Data Lawsuit  

How Allstate and Arity Allegedly Collected Driving Data  

The State of Texas, led by the Attorney General, is considered the “plaintiff” in this case because Ken Paxton filed the lawsuit. The main defendants are Allstate Corporation, several insurance subsidiaries, and Arity. If you’ve never heard of Arity, think of it as Allstate’s data nerve center. It builds tools to gather and analyze information about how people drive. That can include location, speed, phone use, and other signals that point to a specific driving style.  

Texas’s complaint says Arity’s technology didn’t just operate inside Allstate’s own apps. It was also placed inside other popular apps through a piece of code called a software development kit (SDK). An SDK is like a small tool a developer drops into an app to add features like maps, analytics, or advertising. In this case, Texas says the SDK captured driving behavior and location data. The state also claims that some automakers and connected-car platforms provided data streams that ended up in the same analytics systems. Altogether, Texas argues, the companies built a giant database of driving behavior.  

Why the Texas vs Allstate Case Matters for Drivers  

According to Texas, the SDK collected data, sometimes without the driver’s knowledge, such as where people drove, how long trips lasted, how fast they went, when they accelerated or braked, and whether the phone’s sensors suggested risky maneuvers. Basically, the tools were watching how you drive. The complaint says this could happen even when users didn’t knowingly sign up for a “safe driving” program and even if the app’s main purpose was something else, like finding cheap gas or tracking family members.  

Texas claimed the data was combined and scored, then used for insurance decisions, like setting prices, deciding renewals, and, in some cases, sharing insights with other companies.   

“Imagine two neighbors with clean driving records,” Heather Diehl, Daniel Stark attorney, said. “One often drives late at night and brakes hard on busy roads, while the other mostly takes calm daytime trips. Texas says the first neighbor might get flagged as higher risk by a behind-the-scenes score and pay more, even if neither neighbor knew this scoring was happening.”  

Allstate, for its part, has publicly pushed back on the allegations. Insurers often argue that telematics or driving data help reward safe drivers with discounts and reduce fraud. The legal fight here is not simply about whether data can improve pricing, but also about whether people were told in clear language what was collected, how it was used, and whether they had a real choice.  

Why This Lawsuit Matters for Drivers and Privacy  

Price is the most obvious reason. Car insurance can be one of a household’s larger monthly bills. If secretive data sources make your rate jump, that feels unfair. Still, what’s really at risk is transparency, trust, and the ability to control personal data. People expect that if a company is gathering sensitive data, especially precise location and behavior, it will say so plainly and get permission. They also expect an easy way to say “no.”  

There’s also a fairness question. Driving data not only shows how you drive but also where you live and work. Night shifts, long commutes, or high-traffic neighborhoods might look “riskier” on paper. If that leads to higher prices for reasons you can’t change, consumers and regulators may see that as discriminatory, even if no one intended it that way. The case presses on how we define consent, what counts as sensitive data, and how to avoid hidden forms of bias when algorithms influence real-world costs.  

Key Privacy Laws Behind the Allstate Lawsuit 

Privacy Laws in Texas  

Texas’s lawsuit leans on several state laws. The first is the Texas Data Privacy and Security Act (TDPSA). In simple terms, TDPSA says companies need to be upfront about what data they collect, why they collect it, and with whom they share it. People should have meaningful choices, like the ability to opt out of targeted advertising or data sales. Sensitive data, which can include precise geolocation, usually requires stronger protections and clearer consent.  

The second set of rules involves Texas’s data-broker requirements.   

“If a business is in the trade of collecting and selling personal data it did not collect directly from the person, the law may require registration and certain disclosures,” Diehl said.   

Texas argues the companies acted like a data broker without following the rules.  

Finally, Texas cites parts of the Insurance Code that aim to prevent unfair or deceptive practices. Regulators are especially wary when pricing or coverage decisions rely on hidden factors. If an insurer uses a score that people don’t know about and that score pulls from data collected without clear consent, regulators may see that as unfair. It’s important to note that these are allegations. The court still has to decide whether the facts fit the legal claims.  

What Texas Hopes to Achieve in Court  

Texas is seeking civil penalties and court orders to change behavior going forward. Penalties can add up quickly because they’re often calculated “per violation,” which might mean per person affected or per incident. On top of money, the state wants the court to order the defendants to stop certain practices, delete data that wasn’t properly collected, and give consumers meaningful ways to control how their data is used.  

In simple terms, Texas is asking the court for a clean slate on illegally collected data. If the court agrees, companies will need to use plain language to explain data collection, ask for clear permission where required, and keep strong records to prove it. If the court doesn’t agree, we may see lawmakers consider even stricter rules to close any gaps.  

Current Status of the Texas vs Allstate Lawsuit  

As of now, the case is ongoing. Allstate remains an active defendant and is currently engaged in discovery, which is the process of exchanging documents and information. Arity, however, filed what’s called a “special appearance.” This legal move allowed Arity to argue that the Texas court does not have jurisdiction over it. The judge agreed, ruling that Arity had not done enough business in Texas to be sued there. As a result, Arity was dismissed from the case, but that ruling is now on appeal, which means Texas is asking a higher court to reconsider and potentially bring Arity back in.  

Lawsuits like this usually unfold in stages: the state files a complaint, defendants respond and may ask the court to dismiss, and if the case continues, both sides exchange documents and take depositions. Sometimes cases settle if both sides can agree on changes and penalties. Other times they proceed to trial, which can take months or longer.  

“Everyone should be watching how the court handles both the ongoing claims against Allstate and the appeal involving Arity,” Diehl said. “Companies may change their products or communications while the case is pending, and other states or federal regulators may decide to launch similar actions.”   

What This Case Means for Drivers, Insurers, and Privacy  

How the Allstate Lawsuit Affects Drivers and Consumers  

If you’re a driver, you might be wondering what to do right now. Start with awareness. Check the apps on your phone that relate to maps, travel, family safety, and rewards. Look at their privacy settings and the permissions you’ve granted. especially location, motion, and Bluetooth. If an app doesn’t need constant location access to do its job, change it to “Allow while using” or turn it off. On iOS and Android, you can also reset your advertising ID and limit ad tracking in the settings.  

Next, review any “safe driver” or telematics programs you’ve joined. Many of these programs are opt-in and can save money if you drive cautiously.   

“The key is choice and clarity,” Diehl said. “Make sure you understand what is being collected, how long it is kept, and whether the information might affect your base rate – not just a discount. If you’re unsure, ask your agent or the insurer’s customer support in writing.”   

Clear answers are a good sign that the company takes privacy seriously.  

Finally, think about your car. Newer vehicles come with connected services that can share location and driving data back to the manufacturer or its partners. Log in to your carmaker’s portal and review the privacy dashboard. You may be able to toggle sharing off, choose only certain features, or delete stored data. If a teenager in your household uses these apps, walk through the settings together and explain why they matter.  

Lessons for Insurers, Automakers, and App Developers  

For insurers, app developers, and automakers, this case is a wake-up call. The market has moved faster than many compliance programs. People are no longer comfortable with dense privacy notices no one reads. To keep trust, companies should switch from “legalese by default” to “plain language by default.” That means short, direct explanations at the moment of collection, not just a long policy tucked away on a website.  

Companies should also build consent and controls into the user experience. If precise location is truly necessary, ask clearly and explain why. If it’s optional, offer a real choice and respect it. Data minimization is another must: collect only what you need and keep it only as long as you need it. Vendor management matters too. If your product uses third-party SDKs, audit them carefully. Be sure you know what data they take, where it goes, and how it’s used.  

Legal teams should stay on top of state privacy laws, which are expanding quickly. What’s allowed in one state might be restricted in another. Registering as a data broker, where required, is a low-effort step that can prevent big problems later. Finally, consider external audits or certifications to demonstrate that your program isn’t just compliant on paper but effective in practice.  

Nationwide Impact of the Allstate Privacy Lawsuit  

Our devices and vehicles are creating a real-time map of our lives. That map can be useful. It can make roads safer, find lost phones, speed up emergency response, and help insurers detect fraud. However, it can also reveal sensitive personal details, such as where we worship, receive medical care, visit friends or family, and when we are home or away.  

Cases like Texas vs. Allstate are society’s way of drawing lines. What counts as informed consent? How easy should it be to opt out? When does “better pricing” turn into unfair treatment? And who checks the math inside the scoring systems that influence our bills? We may eventually see a national privacy law to bring uniform rules across states. Until then, state cases will shape the norms. Companies that get ahead of those norms by choosing transparency and restraint will likely earn customer loyalty. Consumers who learn to use their privacy tools will feel more in control.  

Key Takeaways for Consumers and Businesses  

El Texas vs. Allstate lawsuit brings to light more than just driving data because it dictates who controls personal information in a world where almost everything is connected. For consumers, let this be a reminder to pay attention to app permissions, car settings, and privacy policies. For businesses, take it as a warning that hidden data collection could lead to lawsuits, big fines, and lost of trust from your valued customers.  

No matter how the court rules, this case signals a turning point. States are showing they are ready to enforce strong privacy protections, and companies must be ready to adapt. If handled well, the outcome could set clearer rules for fairness, transparency, and consent in the digital age. If handled poorly, it could deepen mistrust between people and the technologies they rely on every day.  

For now, drivers, insurers, app developers, and regulators should all be watching closely. The outcome of this case could reshape how car insurance decisions are made and how personal data is treated across industries for years to come.