In the 21st century, our homes are getting smarter. Gadget inventors and application developers are constantly releasing new tools that promote everything from environmental efficiency to additional security - at the touch of a button. When it comes to making household management more convenient, acquiring the latest technology seems like a no-brainer, right? Not so fast says Todd Macumber, President/CEO of the Risk Services Division at HUB International.

Threats to Your Infrastructure
“The impact of smart appliances, applications and other technology creates additional exposure. Some of the risks are more obvious than others,” Macumber says. For example, many web-based home apps (such as those that allow people to control light switches remotely via phone or tablet) are vulnerable to power surges and lightning strikes, potentially impacting your property’s entire electrical system. As time-saving and as neat as tools like this might be, standard homeowner’s policies can be hit or miss on covering this type of claim. You’ll want to understand the full scope of rewards and costs before hitting “install” on that latest download.

Your home’s motherboard may also be affected by the cutting-edge technology sitting in your garage. That electrical car and its charger may be better for the environment, but its use can also overload a home’s electrical system, leading to repair costs and claims. 

Web Security Threats

Beyond the possible consequences to your property’s electrical infrastructure, there are other risks associated with the deployment of modern technology in the home. The installation and use of smart appliances such as refrigerators equipped with WiFi and LCD touch screens, or washing machines that run automatically when electricity rates are lowest, may be a revolutionary convenience - but beware of the resulting cyber hazards. 

As Macumber says, “It’s not super complicated. The basic idea is that anytime you connect a tool to the Internet, it becomes possible for someone to access it.”

From remote-triggered heating and cooling systems, to garage door openers and DVRs that can be managed with a smart phone, all of these gadgets create cyber exposure. Ray Monteith, Senior Risk Consultant explains, “These tools are often created by smaller companies which are not always secure. At the Black Hat USA 2013 Conference, a premier gathering of Internet security experts and professionals, people started raising concerns about the emerging risks to consumers.” 

Threats to Your Privacy
There are also privacy and spying risks that smart technologies in the home can generate. Armed with weapons known as remote administration tools (RAT), hackers can access devices with cameras, baby monitors and more through the Internet. These “rattlers,” as they are known, taunt and prank victims by manipulating desktops and associated features remotely, leaving targets feeling violated and powerless. Monteith shares a case study about a young family harassed by a rattler. A couple had put their infant to bed, and as the child slumbered, he was awakened by a man shouting at him through a hacked baby monitor. 

As Monteith explains, “People think these 21st Century tools are revolutionary. They put so much more control and perceived peace of mind at your fingertips. But as we’ve seen with the recent stories of cyber liability and data breaches at the world’s biggest companies, even the best laid security plans are not foolproof.”

Impact on Insurance Coverage
There are many valid reasons why today’s homeowners are integrating smart home technology into their daily lives. Environmental efficiency, convenience, time saving and in some cases, added security are all attractive benefits. In addition, a “keeping up with the Jones” mentality makes early adoption of the latest technical toys all-but-irresistible for some. 

Macumber’s best advice: “If you want your home to be connected, pause and think about remote monitoring and similar apps. For personal security as well as potential insurance coverage issues, you need tools that are firewall-enabled and password protected - especially any gadget equipped with a camera or microphone.”

Contact an experienced HUB broker and let us work with you to assess any needed adjustments to your coverage based upon your home’s technical configuration. And learn more about additional protection for you and your family.