Would you let your home insurance company monitor your
United Services Automobile Association (USAA)
, the country's leading auto, home and life insurer for military
received a patent
for a data recorder that can be installed in a home for
USAA's device will record conditions that "have led to damage or
destruction of the building" or to "forecast the possibility of
future damage or destruction." The device can track the
temperature, wind speed and mechanical vibrations as they affect
the house, as well as humidity, which could cause mold in the
Sounds like a good idea? Yes, for the insurance company, but not
necessarily for the homeowner.
Through the looking glass
A home data recorder isn't a new concept. Companies like ADT and
Tyco already provide sophisticated electronic sensor technologies
to remotely monitor almost everything that happens in a house or
office, including vibrations that could indicate a break-in. But
USAA's device offers increased leverage for the folks at the
insurance company by giving
a looking glass into your house.
Based in San Antonio, privately held USAA is owned by its
policyholders and did not want to discuss its new product.
Spokesperson Rebecca Hirsch said USAA would talk only about its
innovation efforts in general, and not this patent in
Neither the Property Casualty Insurers Association of America
nor the American Insurance Association, both of which represent
property-casualty insurers, would comment either.
Telematics for houses
Robert Hartwig, president of the Insurance Information
Institute, which also represents the industry, said that even
though he hadn't heard of the product, "it sounds like telematics
for homes." But he did predict that "this device will aid insurers
in underwriting property."
Telematics devices are plugged into cars and offered by auto
insurers such as Progressive, which calls its on-board monitoring
system Snapshot. This monitoring device records people's driving
habits: distance driven, time of day, amount of times the brake is
used and how hard. Driving at night when fewer cars are on the road
usually lowers rates, as does avoiding the start-stop braking that
can lead to accidents.
This invaluable information is used to price "pay as you drive"
or "usage-based" auto insurance policies.
Another black box?
Consumer advocates agree that this could be a boon for home
insurance companies. "By utilizing tools like this . . . insurers
can better manage their risk exposure," says Birny Birnbaum,
executive director of the Center for Economic Justice in Austin,
But insurers could also use that data to make decisions on
policyholder claims and underwriting, as well as other
"The recent history of insurers' use of data mining indicates
that insurers are using these new technologies to simply exclude
certain risk exposure," says Birnbaum. In simple terms: If the
insurer detects high winds around your house, it might cancel the
Robert Hunter, the director of insurance for the Consumer
Federation of America, is also suspicious. "Insurers have been
using more and more black boxes [technology which is only
understood by insurers] to systematically underpay claims," he
Katrina could have been different
USAA's data recorder might have helped insurers expedite claim
payouts after Hurricane Katrina in 2005. At a cost of $110 billion
it is the most expensive storm in history.
There was constant wrangling between insurers and policyholders
across the Southeast, from Florida to Louisiana, as to whether
Katrina's 125-mile per hour winds had knocked down coastal homes or
whether they had actually been flattened by the 30-foot tidal
surge. If the cause was wind, then home insurers such as USAA would
be responsible for claims. If the cause was water, then the
federal flood insurance program
would have to pay those with flood policies.
Watching you watching me
Consumer groups say that it's hard to find a benefit for
homeowners who install a home-data recorder like USAA's unless,
Progressive's Snapshot program
for usage-based auto insurance, the insurer offers a discount to
those who accept. In which case, "this technology offers the
promise of insurers moving towards a greater partnership with
consumers to promote loss prevention," says Birnbaum.
For example, if a homeowner was advised to lower the humidity
after an event such as a flood, he or she could save their walls,
flooring and even prevent illness caused by inhaling mold spores.
But this would require communication between the insurer, which
needs to monitor the device regularly, and the homeowner.
Otherwise, it is similar to the black box in an airplane, which can
only tell investigators why the plane crashed after the fact.
Consumer advocates warn that homeowners should be wary of
devices that monitor you or your property without any benefit to