Malcolm Richards, Managing Director at CEDIA member, Veresure Limited, highlights why many homes with automated technology may not be fully insured under their existing insurance policy and why specialised smart automated insurance is the best protection.
In a world where the future is being designed around smart home technology, is it enough to mention to your customers that they should contact their home insurer to cover installed products and devices?
To all intents and purposes, it is good customer service to ensure that they have properly covered their new system in the event of a claim should things go wrong, but it isn’t necessarily the best assurance for the home integrator.
In the past, when there was a fault with a product or installation, the home integrator had to return to the project to fix the problem, but they weren’t always guaranteed to be paid. As with any product, occasionally things go wrong, and it isn’t the fault of the installer, yet they may well feel responsible for it.
For this reason, it is important for home technology professionals to have some form of protection against the cost of correcting faults, so that they aren’t spending time on projects without getting paid for their time.
Smart Home Insurance
We have come across several incidents where home insurers have given the ‘go ahead’ for replacement of integrated products in cases where the home was burned to the ground, totally unaware that the reinstatement of the home incorporated home automation where connectivity costs represented an average of 30% of the replacement spend.
Awareness within the insurance industry that some homes are not what they may appear on the surface because they have control units and smart technology, hidden wires and wireless networks among other things will result in reviewing their offering and increasing their premiums.
Some insurers already charge additional premiums for products notified after the original policy has been taken out. In other cases, the insurer might take a less favourable stance if they are made aware that the property has smart home automation. In short, they do not like connectivity as it poses a high risk, when and if things go wrong, or if there is a major catastrophe in the home.
Currently, contents and buildings insurance cover can leave customers who experience smart technology failure with a shortfall in insurance cover, leaving them exposed to hidden costs.
When you define what a ‘modern ‘connected’ or ‘smart’ home is - a home designed around an infrastructure of fixed, low voltage data cables and wireless connectivity - you begin to understand the dilemma facing the home insurance market.
With much of the technology being integrated to provide clever, often one touch operation from anywhere in the world using a smart phone or tablet, the need for specific protection becomes very clear.
We would strongly recommend that home integrators advise customers to alert their insurer that their home is automated. If they do not do so, then their insurer could reduce the amount they pay out for the claim, or, in extreme cases, refuse to meet the claim entirely.
Is the insurance industry ready?
It is time for the insurance industry to look more closely at what impact the growth in smart homes will have on premiums and insurance risks in the future and, more importantly, how they deal with such claims. There are plenty of companies offering cover for smart goods, but this is not the same as connected home technology.
New builds are beginning to include some low end technology and this is expected by new home buyers. What they will receive is a NHBC certificate, but this specifically excludes certain products. Ultimately, insuring the technology within the home is the responsibility of the owner.
Smart home insurance needs to protect the whole automation system, including the products, devices, cabling and installation. This will mean that the work that the installer will have to do to fix a fault is always covered.
I would suggest recommending a policy that offers the customer the right level of cover to give them the peace of mind they are looking for. Some customers will not have considered the cost of a call-out and the time consumed investigating any fault, in addition there may well be parts required to repair/replace the fault and the integration of those parts. This type of policy will ensure that the home integrator gets paid for time spent on repairs/replacement.