Risk Conversation®

Smart home technology use is far and wide across the United States, connecting smartphones with apps controlling doorbells, power and water systems, surveillance cameras, garages, audio devices, washing machines, refrigerators, window treatments, sprinklers, lamps, and even pet feeders, to scratch a very deep surface.

Most people love how the Internet of Things has made running their homes more organized and efficient. There’s also the possibility of a homeowner’s insurance discount for those who install certain smart devices that help reduce the risk of fire, water damage, security and other risks.

That said, smart home devices require time and effort to understand how to set up, correctly use and update their performance features. Decisions must be made on consumer privacy issues and cyber risks like identity theft, and homeowners will want to take steps to prevent their data from being collected by the device and potentially sold to third parties without permission.

Here are five rewards and risks to keep in mind when shopping for different smart devices:

1. Fire Alert Devices: Early detection of a fire can protect the lives and health of family members and can potentially reduce the extent of property damage. Several smart devices will alert homeowners of a possible fire, detectable through atypically high levels of heat, smoke, and gas. In shopping for the device, consider different product reviews, price and installation requirements—whether or not it makes sense to hire a professional to install the system and set up the app.
2. Water Leak Devices: Another top cause of loss for Chubb homeowners has been an undetected water leak that results in property damage. Some devices provide point of leak detection alerts only, while others may have an automatic shut-off valve. From an insurance risk management standpoint, automatic shut off valves are considered a better defense against property damage losses.
3. Home Security Devices: Depending on a homeowner’s needs, smart home security systems can provide information on a possible security breach directly to the homeowner, as well as to a third-party security organization for a subscription fee. Smart surveillance cameras, video doorbells, motion sensors and door locks are other ways to enhance security 24/7, depending on perceived vulnerabilities and budget.
4. Humidity and Temperature Devices: For homeowners with valuable collections like wine, art, cars, photo albums and cigars prone to deterioration from fluctuations in humidity or temperature, this smart device is able to sense when these atmospheric conditions change for any reason. Accuracy counts with all types of sensors, so make sure to check manufacturers’ precision ratings.
5. Secondary Home Control Devices:  All the above smart apps are extremely useful in managing a second home, since owners are likely to be at the residence intermittently. Not only will the devices alert homeowners of a possible fire, security or water threat, the installation of a smart lock at the home makes it convenient for a neighbor, police or fire professionals to check out the situation.

Homeowners should reserve ample time to set up the app controlling the smart device. Some manufacturers provide voice or text messages walking buyers through this process, whereas others contain written directions.

During the app set-up process users may be asked for permission to provide third parties with data accumulated in the device, such as buyer’s location data. In the haste to get the app working, don’t ignore the permissions that may be granted if not expressly rejected, as you may come to regret it if a data breach occurs.

Also, whenever the app pushes an update, run it as soon as possible as it may involve patching a potential security vulnerability. In this regard, it also makes sense to talk with an insurance agent or broker about a comprehensive cyber insurance policy that includes account breach and identity theft.

Nicole DiPetrillo is vice president and client service leader for Chubb Personal Risk Services.