While unlocking your home with your smartphone may be convenient, it also can open up your home to new risks. Insurance companies are still assessing what those risks might be, and how it might affect your premium costs down the line.
New smartphone apps can control everything from light switches to thermostats to your home alarm system. It goes both ways, however, and these appliances need the technology to be able to respond to the homeowner’s wishes at the touch of a button.
Hence, the industry’s questions about the effects on homeowner’s insurance. “The equipment required to allow customers to control their household items via their smartphone is not inexpensive at this point in time, and therefore would add to the value of their contents and thus their sum insured,” explained Cohen Quinn, home portfolio manager with Vero.
Insurance companies are evaluating how homeowners insurance premiums will be affected by smartphone apps, like this one from Alarm.com (News - Alert) that can monitor and control your home or business in real-time and from anywhere.
Perhaps the biggest unknown risk is security. In this digital age, information is a commodity that can be bought and sold. And smartphones contain a lot of personal information.
“Depending on how secure the technology is, could other people hack those systems and gain entry to houses than they ordinary can do? This would impact home burglaries,” said Gavin Pearce, director at Deloitte (News - Alert).
There are other issues to think about as well. “In terms of the severity of claims, if the hardware installed in the house is quite expensive, that would add to the cost of replacing the house,” Pearce continued. “The other issue is if there was failure with the system, would that cause any property damage?”
Security, however, may go both ways. If the technology requires stronger security systems, it may be able to deter home invasions as well as alert homeowners to other risks before they cause serious harm, like fires or gas leaks.
Smartphone apps can also help homeowners remember key maintenance tasks with items like HVAC systems and washer hoses, preventing costly failures that damage property.
While the technology is new, a smartphone app isn’t that much different that simple security features that prevent theft now – such as deadbolts and windows locks, according to Gary Gribbin, director at Insurance House and IBNA director. “Ultimately the apps are not much different to what we have now, insofar as they are not foolproof and are subject to human error,” he said.
Edited by Alisen Downey