Is Your Insurance Company Spying on You in Bad Faith?

Would you believe me if I told you insurance companies are using drones, aircrafts, and other aerial objects to take photos that can be used to justify canceling their customers’ policies? 

As bizarre as it sounds, home insurance companies are taking full advantage of the newest surveillance tools to capture high-quality images of homes and commercial spaces from the sky. Insurers are scanning for evidence of customer policy violations, such as damaged roof shingles or overhanging tree branches, to drop risky properties. 

Some might question whether this type of surveillance violates privacy and consumer protections, but could it also venture into bad faith territory? Let’s take a look at the underlying problems that might lead to that. 

Overreliance on Inconsistent Technology

When you purchase commercial or homeowner’s insurance, you consent to a property evaluation. Insurers will argue that aerial photo inspections are less intrusive on the policyholder. 

Less intrusive might be true. But how accurate are the software programs they’re using to scrutinize your property? Industry insiders quoted in a recent Wall Street Journal article claim that aerial images insurance companies use to make coverage decisions are sometimes outdated and misinterpreted. And the policyholders are the ones who pay the price. 

Technology Advancements are Outpacing Consumer Protections

Some consumer rights groups are concerned about whether policyholders can challenge price hikes and coverage drops based on the surveillance footage. And, if so, where do consumers even begin? 

The first logical step would be to request the aerial images, but some insurance companies have refused to allow customers access to them. Some insurers have updated their policies to allow customers to see the surveillance images on request, but it’s not the industry standard. In fact, some insurance companies that do business with airplane imagery programs fail to mention they might use the technology to inspect their policyholder’s property. 

If customers don’t know how an inspection can take place, how can they prepare for it or defend against inaccuracies?

How to Use Colorado Law to Protect Your Rights

In Colorado, insurance companies can’t alter your policy without good reason. For instance, your insurance company can lawfully cancel or refuse to renew your policy. if you miss payments or if your policy is relatively new. C.R.S. 10-4-110 However, Colorado law requires this decision to be made in good faith.

Denying a policyholder access to aerial images used to cancel their policy could violate the duty of good faith. Acting in good faith also requires insurance companies to conduct a reasonable investigation based on all the available information. A violation of this duty could leave your insurer liable for procedural bad faith. If found liable, your insurance company may face compensatory damages or even punitive damages if also found guilty of malice or fraud. 

Insurers are Dropping Properties in Disaster-Prone Areas

Insurance companies are increasingly withdrawing from disaster-prone areas. Climate change is causing stronger wildfires, floods, and severe storms, leading to billion-dollar disasters. 

As insurance companies leave fire- and flood-prone areas, customers in Colorado have seen dramatic increases to their insurance premiums. A 2023 Colorado Division of Insurance study found that average insurance premiums more than doubled over three years. The same study also reported that 76% of insurers decreased the number of Coloradans they covered. 

While the increase is not exclusively linked to natural catastrophes, the cost to them is an important consideration for insurance corporations. 

Recourse from Aerial Images for Homeowners

Being dropped by your insurance company can make it difficult to get affordable coverage elsewhere. There are a few things you can do to make sure your insurance company has its facts straight and doesn’t mislabel you as high-risk: 

• Keep Good Records – Document property maintenance, such as roof repairs or wildfire mitigation, to refute inaccuracies 
• Request Surveillance Pictures – Ask for the aerial photos taken of your property. An insurance company’s refusal to accommodate this request is a red flag. 

Contact our Bad Faith Insurance Attorneys

If you suspect your insurance company has used aerial recognition software to act in procedural bad faith, call Robinson & Henry’s Bad Faith Team at 303-688-0944 to begin your case assessment.