QUESTION:

    Hi Ken, I am not sure if you have been asked this question before.  I read your emails and was wondering if there should be specific wording in a sales or service agreement that addresses Voice over internet protocol (VOIP) connectivity to a system. In our jobs customers connect other systems and services through a VOIP connection usually through the public internet. I see that alarm manufactures are starting to offer this type of connections to alarm panels.  When we provide this type of connection we usually use a virtual private network (VPN) connection or firewall.  Or we work with a client's data/ IT people to get the connection we need. So here is my question. What liability do we have if the clients data network is hacked or compromised through a connection that we use? Is there any wording that protects us as a vendor?

Thank you,

Ralph Meyers

Nu-TEL Communications

Fairfield, NJ

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ANSWER:

    The standard alarm contracts deal with VOIP and the internet in two ways.  First, there are specific contract terms that relieve the alarm company of liability for communication services provided by third parties, which certainly includes the internet.  Second, in the Disclaimer Notice there is a specific recommendation that the subscriber use telephone lines and a disclaimer of liability if VOIP is used.

    There has been some discussion regarding liability if subscriber computer systems suffer damages because of a connection you made.  The standard contract language probably provides sufficient protection.  There are some issues you may want to consider however.

    If you are taking down a firewall or other internal internet protection the subscriber has in place then I think it would be prudent to mention that in the contract and specific disclaimer  may be appropriate.  The standard exculpatory clause and limitation of liability clause would probably protect you.

    You may not be covered by your E&O insurance for internet hacking.  I believe Mike Kelly, insurance broker in CA, has been promoting this issue.  I haven't come across it yet and it may be something we need to address very soon.

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