Internet Poses Special Liabilities
For security companies, as well as VoIP providers, this begs the question of insurance coverage and the companyâ€™s liability if a loss or failure of communication to the central station occurs because of VoIP.
Specialty insurance called Internet Liability Insurance does exist, according to Michael Kelly of Michael J. Kelly Insurance Agency, Santa Barbara, Calif. Kelly recommends that all alarm dealers and central station monitoring companies should consider specialty Internet Liability coverage in addition to their general liability coverage.
Other experts say, however, that while specialty coverage is out there, it might not be necessary for all alarm dealers and monitoring companies. Alarm companies should speak with a lawyer about its contracts and correspondence, as well as their insurance carrier for a review of their policy.
â€œI advise my clients to sit down with their carrier and make sure they are covered,â€ said Lessing E. Gold of Mitchell, Silberberg and Knupp and SDMâ€™s contributing legal columnist. Gold said he believes most alarm companies need not worry about having an exclusion in their policy for Internet liability, â€œbut I would suggest they should have their insurance company put that in writing,â€ he added.
Other insurance brokers and lawyers agree with Gold. Bart Didden, director of Security America Risk Retention Group, the insurance group owned by the NBFAA and its policy holders, said that while Security America has not completely finished its review of Internet Liability Insurance as specialty coverage, â€œwe have not moved it up to the front burner of issues that we have as far as concerns to the overall alarm industry.â€
Didden, who is also president of USA Central Station Alarm Corp., a 23-year-old company that operates central stations in New York, Connecticut and Minnesota, advised alarm companies to continue focusing on communicating concerns about VoIP coverage to every single subscriber. â€œI would say at the very least [such communication] should be done annually, if not with every communication to the subscriber, including contracts, sales proposals and bills. Anytime they communicate, [companies] need to make a disclaimer that they should get approved by corporate counsel,â€ Didden said.
At the very least, said experts, alarm companies need to continue to stress the importance of a backup communicating device such as a POTS line to its customers and educate customers on the possible problems with switching, to help ensure that communication goes uninterrupted.
The VoIP service providers need to be educated as well, according to a pan-association group called the Alarm Industry Communications Committee (AICC), made up of the Security Industry Association, the National Burglar and Fire Alarm Association and the Central Station Alarm Association. One of the objectives of the committee is to educate the cable industry on VoIP issues and the importance of doing their part in advising cable customers of the risks and steps to take to verify any alarm system on a customerâ€™s premises after installing VoIP service. In addition, the AICC is working with cable companies to work out a solution such as having cable companies send regular signals to ensure compliance with alarm communications.
VoIP, however, is only one aspect of Internet Liability Insurance, according to Kelly. Another consideration for alarm companies is that such specialty policies cover more than just liability in the event that VoIP fails to transmit an alarm signal. Such coverage also protects the alarm company against problems with the companyâ€™s own network or Web site, including false advertising liability or virus liability, Kelly said. Alarm companies should contact their insurance carrier or lawyer specializing in the industry to determine what is best for them.