Debunking Myths About Privacy in Claims Investigations

Privacy has become one of the most misunderstood parts of claims investigations. Claimants often assume insurers have limitless power to monitor, record, or follow them, especially during a contested claim. At the same time, insurers must balance fraud prevention with legal and ethical obligations. With technology evolving rapidly, the confusion has only grown.

The truth is that privacy rights are stronger than most people think, and investigators must follow strict boundaries to protect both the claimant and the integrity of the investigation.

Myth #1: Investigators Can Record Claimants Anywhere.

Investigators cannot record inside any area where a claimant has a reasonable expectation of privacy.

Privacy law in the U.S. relies heavily on the concept of reasonable expectation of privacy, established by the Supreme Court in Katz v. United States (1967). This means a claimant’s home and anything inside it is protected space.

Investigators are prohibited from recording inside:

• Bedrooms
• Bathrooms
• Living rooms
• Home gyms
• Behind closed doors
• Through windows, even if blinds are open

The FTC reports that 42% of privacy-related complaints involve improper access to private home data or images, reinforcing how sensitive interior surveillance is.

Even if an investigator is standing legally on a public street, recording interior activity is not allowed. Courts consider this intrusive and potentially actionable, as seen in Tucker v. American Employers Insurance Co.

Myth #2: Investigators Can Record Any Conversation.

Audio recording without required consent is illegal and sometimes a felony.

While eavesdropping (simply overhearing a conversation in public) is legal, recording that same conversation without consent can violate state and federal law.

Consent laws vary by state:

• 12 states require two-party (all-party) consent (CA, FL, IL, MD, MA, etc.).
• 38 states allow one-party consent, meaning one person in the conversation knows it’s being recorded.

On a Federal level, the Electronic Communications Privacy Act (ECPA) prohibits intercepting any oral, wire, or electronic communication without proper consent.

According to the US Department of Justice, thousands of wiretap violation investigations occur annually, many tied to improper or covert audio surveillance.

Myth #3: Investigators Can Look at Anything on Social Media, Even Private Accounts.

In reality, public social media is fair game and private content is protected.

Social media is one of the richest investigative tools available. With 5.41 billion active users worldwide, public activity can provide valuable context to a claim.

Investigators may review:

• Public posts
• Public photos
• Public videos
• Public comments
• Tags from friends with open profiles

But they may not:

• Create fake accounts
• “Friend” claimants deceptively
• Gain access to private profiles through trickery
• Request private info from someone’s connections

These actions violate platform rules and may violate privacy laws.

The FTC’s 2024 Privacy & Data Security Update confirms that deceptive data collection, even from public sources, can trigger enforcement action.

It’s important to note that deleted social media content can still exist through screenshots, backups, or web archives, meaning “delete” doesn’t always mean gone.

Myth #4: Insurers Can Use Any AI or Tech Tools They Want in Claims Investigations.

AI is regulated, and claimants have rights over how their data is used.

As insurers integrate tools that analyze social media, detect anomalies, or flag potential fraud patterns, privacy laws are evolving too.

Consumers now have data privacy rights under:

• California Privacy Rights Act (CPRA)
• Virginia Consumer Data Protection Act (CDPA)
• Colorado Privacy Act (CPA)
• Connecticut Data Privacy Act (CTDPA)

These laws allow consumers to opt out of:

• Automated decision-making
• Profiling
• Certain types of data collection

Additionally, AI tools must have oversight and transparency; otherwise, decisions may be challenged in bad-faith disputes.

The FTC has repeatedly stated that misuse of AI, facial recognition, or biometric data is an enforcement priority for 2025.

Myth #5: Investigators Can Use GPS Tracking in Claims Investigations.

GPS tracking without consent is almost always illegal.

Following the Supreme Court’s decision in United States v. Jones (2012), attaching a GPS tracker to a vehicle is considered a search, and it requires a warrant or explicit consent.

States like:

• Florida (§934.425)
• Texas (Penal Code §16.06)
• California (PC §637.7)

…impose criminal penalties for unauthorized GPS installation.

Even in cases of joint vehicle ownership, investigators must obtain clear, written permission from at least one owner, and best practice is to get it from all.

According to the Coalition Against Insurance Fraud, GPS misuse is one of the fastest-growing digital privacy complaints linked to fraud investigations.

Myth #6: Investigators Don’t Have to Explain Anything; They Can Investigate However They Want.

Insurers must act in good faith and follow strict investigative standards.

While investigators don’t disclose tactics, claimants have protections:

• Investigators must act reasonably
• They cannot harass or intimidate
• They cannot delay claims without cause
• They cannot ignore evidence
• They must avoid unnecessary intrusion

New laws like Florida’s HB 837 (2023) also raise the standard by requiring evidence of intentional wrongdoing to prove bad faith.

Reasonable, lawful investigation is allowed. However, unreasonable, invasive investigation is not.

Building Trust and Ensuring Fairness in Claims Investigations

Privacy myths often come from outdated assumptions, legal misunderstandings, or online misinformation. Claimants may overestimate what insurers can do, while insurers sometimes underestimate how sensitive claimants are to surveillance.

Clarifying these boundaries benefits everyone:

• Claimants understand their rights and feel respected.
• Adjusters avoid legal pitfalls and accusations of overreach.
• Insurers maintain good-faith standards and protect themselves from liability.

When both sides understand the truth about privacy, the investigation process becomes more transparent, more ethical, and ultimately more effective.

Want to learn more about privacy in claims investigations? Register for our “A Claimant’s Right to Privacy” CE.

Check out our sources:

Coalition Against Insurance Fraud. Digital Privacy Risks in Insurance Investigations. Coalition Against Insurance Fraud, 2024, www.insurancefraud.org.

DataReportal. Digital 2024 Global Overview Report. DataReportal, 2024, www.datareportal.com.

Federal Trade Commission. Consumer Sentinel Network Data Book 2024: Privacy and Identity Theft Complaints. FTC, 2024, www.ftc.gov.

U.S. Department of Justice. Wiretap Act and Electronic Surveillance Enforcement Overview. U.S. Department of Justice, www.justice.gov.