Report: Natural disasters and smart home risks on the rise, insurance coverage on the decline

For 26 years, West Coast Casualty has been hosting the biggest (and best) gathering of professionals in the construction defect litigation industry. The 2019 seminar was held in May at the Disneyland Hotel in Anaheim, and once again, my colleagues and I from Xpera Group were on hand as sponsors.

As I’ve done many times in the past, I put together my observations on some of the sessions I was able to attend. The article is called, “Tragic Trifecta: Smart Home Risks, Natural Disasters and Dwindling Insurance Coverage,” and was featured on the Xpera Blog and in our newsletter that came out in the Summer.

Global Climate Change x Construction Defect Litigation

In the report, I noted that there was a panel discussion featuring a number of experienced legal and insurance professionals discussing the increased overlap between property loss claims stemming from natural disasters and construction defect claims. Here’s an excerpt:

You might be wondering how defective construction relates to natural disasters, but the answer is simple: There is not enough insurance coverage out there to compensate victims of natural disasters. Therefore, creative plaintiff attorneys are looking for other avenues to fund the next generation of claims.

When you combine a sympathetic jury pool (influenced by widespread media coverage) with a lack of resources for recovery, it’s easy to see how the biggest emerging trend in 2019 is litigation related to climate change-driven natural disasters, the panel stated.

Construction defect litigation has for years involved a fair amount of chasing after sufficient coverage to fund resolution of claims, not to mention to cover the exorbitant legal and expert fees. (Despite how efficient we try to be, claims are costly to respond to.) Now it seems that the insatiable need to find coverage even more costly property loss claims may become a trigger for new construction defect claims.

The only thing that remains the same when it comes to the world of construction defects, is that things are always changing.

(Not So) Smart Homes

Another panel discussion I sat in on was also on a topic near and dear to my heart, and one that now impacts me personally.

Smart Homes are any residential dwelling unit equipped with technology that interfaces or controls or monitors one or more building systems. Examples are anything from smart thermostats (think Nest), or digital door locks or even Alexa-, Siri-, or other AI-enabled devices.

These technologies seem to be aimed at making life easier for humans. So what’s the problem?

Some examples of the risks associated with smart home and Internet of Things (IoT) devices in the built environment:

  • Just as a home’s network allows multiple devices to connect to one another to share information, it can also be used to share malware and spread infection. All it takes is one device getting hacked to expose the other devices on the network to infection.
  • In one study, 58% of Android devices were found to be vulnerable to known threats.
  • Smart door locks, such as those being installed at hotels, apartments and other locations with increasing frequency, can be hacked and compromised from up to a quarter-mile away.

Read the full article at the Xpera Blog for more.