Re: question about VOIP and liability

[Nomen Nescio <nobody@xxxxxxxxx>]

Bob Worthy said:

>I am wondering if anyone has actually talked with your liability insurance
>underwriters about the pros and cons with this VOIP and security
>communications issues. I know all of the techy types drewl all over new
>technologies and how cool it is and how we can make it work and all that.
>Hell, give us enough parts and we'll build a helicopter out in the parking
>lot.

Let's not make this more complicated than it really is.  The real question
is, does your insurance company have the right to deny coverage if you
connect an alarm system to a VOIP service?  I've read my policy, and the
answer is no.

Naturally, your insurance company's lawyers want to be on the strongest
legal footing possible.  Meaning, they want your contract to be up to
snuff, and they want you to fully disclose weaknesses and vulnerabilities
in the system to avoid a charge of failure to warn or misrepresentation.
But the bottom line is, do they have the right to deny coverage?

It's pointless to talk to your insurance agent about stuff like this,
because the VOIP issue probably hasn't been litigated in your state yet,
and the agent won't know what you're talking about.  Your contract should
contain a limitation of liability, which applies even if you are negligent.
Those are magic words to insurance companies:  even if the insured is
negligent, their exposure is limited to a few hundred bucks.

That leaves the question of gross negligence, which generally isn't covered
under the limitation of liability.  First of all, that's probably not your
problem, since your insurance company still needs some reason to deny
coverage, something that is spelled out in the policy they sent you.
However, you can probably use a waiver to get rid of a gross negligence
claim.

You need to explain to your subscriber, in plain English that any moron can
understand, why VOIP is not as reliable as regular telephone service.  You
need to tell them that regular telephone service is not guaranteed to be
working either.  And, if you can, you need to offer them an alternative
like radio at an extra charge.  If it's written in plain English and
explains the options and their limitations, they can hardly come back later
and say they didn't understand.

Nobody is forcing them to buy a system from your company.  You are not a
public utility.  They can shop around and compare the security offered by
different providers, and choose the system and the price tag that is right
for them.  Talk it over with a lawyer who does business in your state, and
pay him for his advice.  Why rely on what a bunch of alarm guys tell you?

- badenov