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Home Automation and the Data it Collects
By Ken May

 Most of us are enthralled with technology. We can’t get enough of it and can’t wait for the next “big thing” to buy. People have actually been injured or even killed by walking into traffic while focused on their smart phones. 

 Most growth has been driven by access to content and speed. You don’t believe me? Google it! 

 We are now moving into the next phase of growth where every day “things” around us will be connected to the internet. This is being called the Internet of Things (loT). The Internet of Things promises a revolution in how we live by connecting our homes to our smartphones and other mobile devices. 

 Already, some high-end homes (not mine) have a variety of appliances and devices like refrigerators, washing machines, thermostats, security systems, and even the inside of walls are embedded with sensors enabling them to exchange data with each other and with us. This information flows wirelessly over the internet to provide useful information such as when an appliance is in need of maintenance or when somebody breaches the security system. Or how about “nanny-cam”? Using our phones, we can change the temperature in our house, change the light settings, turn on or off the television set, or start the coffee maker.   

 While this is all really cool stuff, it comes with risks. Every loT device accumulates, transmits, and stores data for access. And where there is data, there is the threat of data breaches. If you have the ability to turn on and off the security cameras in your home, hackers can obtain the same ability. While it’s great to know when your furnace needs maintenance or when a pipe is leaking inside of a wall so that we can proactively have the problem fixed before the walls need replacing or before mold grows inside of the wall, these loT devices are still new and extremely vulnerable to cyber breaches. Once one loT device is hacked, it is very easy to access the other lot devices as well. Manufacturers are more concerned with acquiring customers and selling products rather than keeping them safe and secure.

 In 2015, Wired Magazine commissioned two “ethical” hackers to see if they could hack into a vehicle’s collision avoidance system. They succeeded by breaking into the vehicle’s entertainment software which opened a pathway to the car’s steering and braking systems remotely!

 Some loT devices are activated by voice recognition which opens up the possibility of a hacker listening in on private conversations or business meetings. 

 So, what is the insurance world doing about this? Right now, there are no policies that specifically protect against a financial loss caused by a breach of a loT device. There may be limited coverage from identity theft coverage.

 Have you heard the old saying that wars create the latest medicine? Insurance companies are evaluating all of the risks involved with these high-end tech products that are so cool to use. Once the wide range of cyber loss exposures are studied, then the companies can craft insurance policies to protect the consumers against most losses. This is not a chicken and egg type thing. The losses definitely come first and then the insurance companies create policies based on the losses. I believe that cyber insurance will be the next “big thing”.

 In the meantime, may I suggest that you enlist a cyber professional to set up some protections and maybe you might not want to use 1234 as your password? And have the system checked out regularly and monitored by a pro.  

If you would like to speak with a licensed agent, please call our office at (760) 893-8055 or contact us via email.

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