The World Wide Web is here to stay and the alarm industry’s growth and future service will need to have a “perimeter of security” to safeguard electronic data for all of its services, especially security monitoring.

The concern for secure data over the Internet is worldwide, with deep pocket exposure. Warnings of VoIP use for alarm monitoring came last year from Congress in Bill SB525 with notification to customers that the use of VoIP connections may cause disconnect of alarm services. The Underwriters Laboratories does not certify alarm monitoring over Internet/VoIP circuits. The FCC has required all Internet companies to comply with 911 emergency support standards now lacking. In Europe Internet “open space” security data standards are being developed.

The general public’s view of alarm security today is peace-of-mind and confidence. As the alarm industry moves deeper into the use of Internet-based technologies, electronic data security will become more important to the industry than will false alarm exposures.

Alarm Industry Use of the Internet/VoIP

The gateway to the Internet comes through everyday e-mails and Web site portals. Security monitoring for fire, burglary, access control with video, biometric identification, and CCTV are all electronic data transmissions that require secure data. Those services should be within the control of the alarm dealer’s “perimeter of security” that needs to be extended between the dealer and his clients to guard against data virus losses.

I believe that two-way video over the Internet will be the alarm industry’s future key, connecting the smart home with video monitoring that will include real-time viewing of baby sitting, medical emergency confirmation, door access verification, and false alarm verification — opening the door to multi-use systems to include Internet protocol television (IPTV).

VoIP Liability, Mitigation & Electronic Data Insurance

As the security industry works to establish secure data standards, the following list of possible electronic data liability exposures are some of the items to include in planning mitigation and insurance responsibility and protection.

• Web site, e-mail, Internet equipment sales and Internet alarm monitoring.
  
  
• Viruses (accidental or unknown) causing wrongful 911, fire, burglary, or access disconnect and causing contingent bodily injury/property damage.
  
  
• Consulting, designing and installation of Internet equipment used for alarm, fire, 911, medical, and door access control.
  
  
• Unauthorized access or identify theft by rogue employees or an act of cyber terrorism exposes alarm dealers to a “chain of breach” liability.
  
  
• False or misleading advertising over e-mail and Web sites.
  
  
• Trademark and copyright infringement over e-mail and Web sites.
  
  
• Punitive damages (where allowed by law) — Internet E & O liability.
  
  
• Property damage to software/hardware causing loss of income to clients.

Coverage for alarm contracts with Internet disclaimers requiring defense will not be found within a general liability policy. Coverage will be required by an Internet “Electronic Data” policy.

To mitigate Internet secure data liability, the use of anti-virus software, hub firewalls, inspection of computer spyware, and the followup with a full-time department head (“cyber cop”) who will coordinate virus detection and ensure Internet control standards are enforced.

Electronic data insurance is not found within a general liability E&O policy. This is because it is based on “tangible property” and the definition of this coverage is for real property and bodily injury — not electronic data. Conversely, Internet liability is based on electronic data that goes over the World Wide network. Insurance for electronic data liability provides coverage for two main exposures, and covers first-party and third-party liabilities.

The Internet is open 24/7 and so is alarm monitoring. The failure of a phone or Internet/VoIP circuit is not the responsibility of the alarm dealer; it’s the exposure to data virus. The alarm dealer is exposed on both a first- and third-party basis: data virus contamination can strike both you and your clients. Electronic data insurance can and should cover both parties.

Author’s Note: The information contained in this article is not provided for the purpose of rendering legal advice or services. Before making any decisions or taking any action you should consult a trusted insurance broker or agent and a legal advisor.