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Comment:

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Ken:

    Your article of Jan 2010 in SecurityInfoWatch on IP alarms had brought up a few interesting issues.   It is true & agreed alarm monitoring communications over POTS (phone) lines is beyond the control of the monitoring co.   However communications over a VoIP Networks for monitoring now has control responsibilities to protected the alarm network from  “Cyber (virus or Hacking) Breach” , this exposure is referred to as “Frailer to protected your Network” .  

     I have built into our Cyber Liability Policy  E&O for negligent including gross negligent for “Cyber Breach”   that extends to PERS, Alarm, GPS, & Video Monitoring ----------------and use of E-mail & Web Sites Network Liabilities is also provided.

    My view on the contract provision is to included the words VoIP,, Network, Wireless, Phone lines and all  communications , this covers both “Analog and IP (Internet Protocol)” transmissions.

    The issue of Insurance coverage  for a General Liability E&O policy address “Analog ‘ or POTS Line communications Liability, and the Cyber E&O Liability policy address VoIP /Network Liability is--- both policies interface with one alarm contract.

    Its is my understanding you are providing a VoIP Disclaimer Notice which is separate from your contrasts , we need to review all the above between us to understand all view points.   ATT has confirmed over 42% of the USA has switched from POTS Lines to VoIP Networks.  Over the next 5 years 90% will have changed over to VoIP communications.

Best Regards;

Mike Kelly

Security & Communications Insurance

800 329 5355

www.alarmchannel.com

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Response:

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    My Standard Alarm Contracts have been updated to include IP and Internet monitoring, although the Disclaimer Notice still warns subscribers that POTS is the preferred mode of communication.  In view of the email article that circulated on February 9, 2010 in which Mark Fischer of Nationwide Digital opined that POTS may soon be obsolete and VOIP the more common mode of communication, cyber liability issues which Mike Kelly has been so concerned about may very well become an important consideration insurance issue. 

    I spoke to Mike about his E&O program, which he developed.  There are a couple of points that he explained.  First, his program is underwritten by a carrier that offers the traditional general liability coverage with E&O for the alarm industry, but also includes cyber liability as part of the package.  Mike says that for minimum cover the premium is about the same as the other E&O policies in the alarm industry.  May as well get the extra coverage. 

    Now here is what cyber liability involves, if I understand it correctly.  First, a cyber attach [hacker would be one] that shuts down the central station computers preventing monitoring.  Second, that same virus then attacks the subscriber computer systems that are tied into the central station's computers through the Internet.  Apparently current E&O policies would not cover the alarm company from a claim arising form such an event.  Mike's policy would.  And, before I move on, Mike is offering a 5% agency premium discount and  Security America Risk Retention Group is offering a 5% premium discount if you use the Kirschenbaum Standard  Contracts, so make sure you get that discount.

    Mike Kelly compiled a list of examples for cyber liability.  Here it is:

 

 Examples of Cyber Liability not Covered an ANY GL Policy:

 

1)       “Identity Theft Liability” CRIME exposures of 1st and 3rd parties over the Internet that “breach” the Network Computers and access Med. info. BIOMETRIC ACCESS ID.,and other Personal data of Employees and Clients, FTC Required Notification Liabilities Is---- Cyber Liability.

 

2)       World Wide Liability of Internet Alarm Monitoring “Virus Infection Breach” that shuts down a Central Station Monitoring—“Frailer to Protect your Network Liability”  Cyber Contingent BI /PD Liability’s is Cyber Liability.

 

3)       IP / Internet Media---Use of  E-mail or Web Site Personal Injury Liability , Includes Copyright Infringement, Virus accidental introduction into network, Invasion of Privacy,  Liable / Slander / e-Hosting / e-Learning. are Cyber Liability.

 

4)        Network Acts Terrorism Liability, including World Wide Cyber Extortion, Data & Software Replacement, e-Business Interruption/ loss of income/extra expense/ is Cyber Liability.

 

5)       Internet Network Unauthorized Transfer Liability---loss of Funds / Money / Securities is Cyber Liability.

    If indeed alarm communication is going to involve and depend upon the Internet cyber liability policies may very well be necessary for proper protection.  I'd like to hear more from Mike on this and also from the other alarm insurance brokers who often contribute to this forum.

    I may even invite Mike to make a few comments at my first day presentation at the Smith & Wesson Security Dealer seminar on March 24, 2010.  For those of you who don't make it to the bottom of these emails [Mike apparently doesn't get that far], here is where I'll be at the ISC show in March:  I hope to see all of your there.  Stop by and say hello.

              Smith & Wesson 2nd Annual Security Dealer Conference.  March 24 and 25, 2010 at ISC West; Sands Expo & Convention Center, Las Vegas, Nevada.  March 24 2010 open to all alarm companies - topic alarm contracts and other issues of interest to the alarm industry.  March 25, 2010 topic HOW TO USE THE KIRSCHENBAUM STANDARD CONTRACTS [see seminar information below]: open to S&W authorized dealers and by invitation; For non S&W dealers the cost to attend is $200.00, prepaid. Additional attendees from your office pay only $125.00 each, prepaid. You must reserve a spot for the meeting by calling Eileen at 516 7476700 x 312.  For information on becoming a Smith & Wesson dealer contact Ray Kerr in dealer services at 888-600-1852

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Another comment on POTS

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Dear Ken,

    I don't see POTS lines going by-by so quickly. If you know what's out there in terms of other types of equipment that rely on POTS lines it won't be so easy for them to 'Sunset' POTS lines. If you think otherwise, just look at most telephone co.s Just about all of them still support 'dial out'(non touchtone) style service because there is still some who use this anceint technology to connect their calls for whatever use.

    If your readers are concerned about any pending proposed legislation, I would encourage ALL to make their voices heard in Washington in favor of NOT removing POTS lines-a vitally needed service.

If you have any info on any pending bills, etc. PLEASE let all your readers know so we can call & write our elected officials.

Thank,

 Ben/Security G