Experts worry insurers are moving too fast on the concept of ‘smart homes’

When most of us hear the term “connected,” our thoughts immediately turn to our phones, laptops, tablets and other devices we rely on far more than we’d perhaps like to admit. However, this term has actually undergone something of an evolution over the last few years, such that it now encompasses more than just these ubiquitous mobile devices.

For example, many of the everyday items found in homes across the U.S. from appliances and thermostats to security systems and baby monitors are now connected, providing owners with real-time information on all aspects of their so-called “smart homes.”

While the notion of being constantly attuned to the internal functioning of a dwelling is undoubtedly appealing to many homeowners, it turns out they aren’t the only interested parties.

Indeed, reports indicate that an increasing number of insurance companies are actively researching this area, subsidizing devices and even offering specialized trial coverage for the owners of smart homes. If you don’t believe it, consider that the research firm Accenture determined that pilot projects run by insurance companies for smart homes increased by 13 percent from 2014 to 2015.

Some experts, however, are skeptical of this push by insurance companies for more smart homes, theorizing that it’s less about helping consumers prevent losses and more about protecting their bottom line.  

Even more interesting, many of these experts also indicate that there are issues with this push for greater home connectivity that insurance companies have yet to consider:

• Security breaches: The technology used by many of these smart products is still far from perfect, meaning it’s vulnerable to cyber attacks that could compromise the personal information of customers. Compounding the problem further is that those insurance companies pushing smart homes, smart products, etc. only offer cyber liability insurance to companies or individuals with valuable data, such that the average homeowner is essentially out of luck if they are hacked.
• Difficulty proving claims: While it always seems to be a relatively easy matter to prove a break-in, thanks to broken windows or kicked-in doors, smart devices in the home could make it far easier for thieves to simply hack and enter — and that much harder for consumers to prove that they were indeed robbed.
• Privacy concerns: As helpful as a smart home and smart products can be, there is also an as yet undetermined line as to how far consumers want the technology to extend. Indeed, it’s easy to see how consumers would be less than enthused about the prospect of their security system informing their insurer everything they leave the house without setting the alarm, resulting in reminder messages, premium hikes or even denied coverage.    

What are your thoughts?

Consider speaking with a skilled legal professional if you have questions or concerns related to denied or delayed claims under a homeowners’ insurance policy.

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