Tag Archives: Internet of Things

Cyber Risk, Technology

Reminder: your smart home security system is hackable

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Doors that can be locked remotely with a smartphone app. Facial recognition cameras that alert you when certain people arrive at your front door. Motion sensors that trigger video recordings when someone steals your Amazon packages.

If we’re being honest, smart home security systems sound extremely creepy to me.

But I understand the sell: smart home security devices can keep people safe and offer peace of mind – did I remember to lock the door? Doesn’t matter, my phone can lock it.

Nothing in this world is perfect, though. Unlike smart home security systems, you can’t use a computer to hack into and unlock a standard deadbolt.

The Insurance Journal recently ran a piece describing yet another experiment where researchers easily hacked into someone’s smart home security system. In one scenario, a researcher hacked into a person’s phone using a coffee shop’s free WiFi. Once inside, he accessed their smart light switch app, and then jumped from there into the smart home’s security devices. Voila, smart door unlocked. All that’s missing is a red carpet to welcome thieves as they waltz in the front door.

This shouldn’t be news. Here’s a video from 2016 of researchers hacking into a smart lock:

Everything is a trade-off. As informed consumers, we can’t assume that a solution to one security problem (forgetting to lock our doors) will solve every other security problem – or that it won’t create new ones (hacking into our front doors). It’s important to weigh the risks and benefits of smart home security, and to conduct due diligence in researching the cybersecurity protections of each system. It’s also important to consider additional protections, like purchasing cybersecurity insurance coverage, just in case.

If that sounds onerous, it’s nothing compared to dealing with a robbed house.

Homeowners Insurance, Technology

Water damage is costing homeowners billions. Could IoT help?

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Pop quiz: what’s one of the most common types of homeowners insurance claims? (Hint: it’s not fire.)

It’s water damage. Maybe that’s not surprising – it rains a lot in many places. But what may surprise you is that things like pipe bursts and broken appliances are increasingly the main causes of water damage in homes.  

In insurance-speak, these are called “non-weather water damage claims.” Worryingly, these claims are happening more often and are getting a lot more expensive. A Best’s Review article reports that the average homeowners water damage claim is now over $6,700. Large losses (over $500,000) have doubled in number over the past three years. Non-weather water damage is now costing insurers (and their policyholders) billions in losses every year.

This is happening for several reasons. Our housing stock is aging, as is our infrastructure. More houses are being built and they’re getting bigger – many houses now have extra bathrooms and second-floor laundry rooms, which means more piping. (The story is probably different in Florida. You can read why that is here.)

But the worst part is that many – if not most – water damage claims are preventable. Inspecting pipes or conducting routine maintenance can go a long way. That’s where the internet of things (IoT) comes in. Smart devices and connected sensors installed on piping can detect leaks before they occur or before they cause too much damage. They’re basically smoke detectors, but for water.

And they work. Best’s Review noted that installing IoT devices can reduce water losses by up to 93 percent.

The Review quoted an IoT company CEO who claimed that leak detection devices could save insurers and their customers $10 billion every year.

Homeowners have admittedly been slow to install IoT to help detect leaks. But insurers are hopeful that raising awareness about the issue, offering policyholder incentives like premium discounts, and encouraging IoT installation during home construction will begin to turn the tide.

 Update: Of interest, Washington state adopted a rule in 2018 that specifically mentions water monitors and water shut-off systems as permissible tools for an insurer’s risk reduction program.