Think before you as “siri” or “alexa”– Ramifications of the New Smart Home.

Technology has revolutionized our lives, from the way we communicate with each other to the way we conduct business, it permeates our lives at home, in the car, everywhere.  With the advent of smartphones , personal computing technology has is faster, smarter, and more pervasive than you think.   From black boxes in cars, tracking software in phones, technology firms incorporate privacy invaders in cars, weather stations, and now homes.   With the huge popularity of  Google Home and Amazon Echo, devices that engage with users to do tasks at their bidding, many aspects of our daily lives are being recorded for various benign and, less than benign reasons.   Simple tasks like checking the weather, turning on and off lights, or locking your car, speeding down the local street, all leave electronic trails, some more clear than others.    According to the Seattle Times, “in a bid to spread the gospel of home automation, has rolled out free consultations from in-house experts that help customers build out a connected home. The Smart Home Consultation advisers come to consumers’ homes to demonstrate smart home products, and make personalized recommendations on what gadgets to buy.”  The “smart home” sales grew 57% from 2015 to 2016, showing the explosive popularity, but how often do you consider the other side of the data– the intrusion into your personal space.   These machines, particularly Google Home, know everything about you.

For example, in homes, control panels regulate shade controls, televisions, temperature, security systems, lighting, speakers, music, and countless other functions. The control panel collects data which may actually track the occupant’s comings and goings, especially if the smart appliances are activated by voice control.  Much of the time the automation of daily life functions means that homes are more efficient and cheaper to manage, energy-wise, because it’s easier to quantify and control your usage.

But, have you considered the impact of this data on insurance claims?   According to the Claims Journal, data collected from smart devices will improve first notice of loss, settlement and subrogation – several steps of claims processing.    Yes, at some level, an insurance company for a smart home equipped property, could look at each stage of the insurance value chain, beginning with customer engagement all the way through pricing and underwriting, and ultimately, claim settlement, the data from connected home devices has the potential to improve each stage.

Does the future include smart homes which track data in real-time, recording a malfunction, which is then communicated to the insurance company?   Is this something that you are willing to live with.    Will that same insurance company use your own commands, questions, or searches to deny a homeowner’s claim.   Time will tell, but you should seriously consider what trail you leave with your various smart devices.  Eventually, smart home data will enable insurance providers to create customized insurance plans, tailored to the actual data accumulated over years of research, or use of the smart device.   In fact, there are insurance companies already working with data mining companies to partner with insurance companies and smart home device makers to develop connected information chains that allow insurance companies to parse through data collected.   Insurance companies have been bolstering small startups in the smart home industry by giving them cash infusions in exchange for being the insurance provider associated with the startups’ products.

One area of concern, however, is the idea of cybersecurity. Hackers are becoming an increasingly widespread problem and protecting consumers’ data is an important and difficult task. Because smart home technology is relatively new, insurers are wary of the security risks of this nascent technology. However, as products are developed and new technologies discovered, security will be increased due to its wide implications for Americans. Smart homes both make our lives easier but will improve the often complicated insurance process.

Klose & Associates can help you with any insurance matters you may need, from policyholders disputing claims with their insurers, insurance litigation, and property damage claims. Klose & Associates can advise and Pull for You if you need help navigating the various ins and outs of an insurance  claim.

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