Amazon recently announced Amazon Key, a new service which allows for delivery when homeowners aren’t home by giving delivery drivers a special digital key. Talk about convenience with the risk of paying the ultimate price. This Amazon Key feature is a new development that would keep many skeptical for a long time coming. There are several questions yet to be answered: How secure is Amazon key to hacking and who will cover the insurance risks?
With the help of a compatible smart lock and security camera, delivery drivers will be able to unlock the front door and deliver the package inside, all while the customers watch from their smartphone away from home. But Michael Macaulay, CEO of Quadrant Information Services, questions whether the security risks, privacy concerns, and insurance implications are worth the “convenience”.
“Amazon Key is still in the early stages – there are so many questions surrounding liability if a problem were to occur during delivery. Who’s liable if a delivery person falls or hurts themselves inside of a home? For homeowners with pets, what if they get loose through the door once it’s opened by the delivery person? What if a pet attacks the delivery person? In any of those situations, will Amazon be held liable or will the homeowner be at fault? Who will be in charge of the worker’s compensation?”
Potential for Amazon Key to be hacked
This is not all the negatives associated with the Amazon Key. There have been several incidences where smart locks have been hacked, and the Amazon key does not appear to be immune to that possibility.
Macaulay adds that smart locks are also still in their infant stages. Several losses due to the smart lock have been recorded, and security experts aren’t completely sold on them, due to security flaws that could leave you more vulnerable than you’d be using a traditional lock. For Macaulay, Amazon Key – in theory – is an innovative idea, but the practicality of the service remains to be seen. Key service is an innovative idea that still needs lots of improvement.
What are the insurance risks?
No matter how convenient it would be to use the Amazon key, it is only proper to weigh in the insurance risks the Amazon Key service presents.
Apart from the risk exposure of being hacked, there is a growing chance that insurance companies may not be willing to cover the risk involved in this whole process. The health insurance of delivery workers also needs to be taken into consideration.
According to Macauley, “Assuming your insurance company doesn’t exclude Amazon Key exposure, this technology provides for similar exposure to what exists without the technology. The difference is that the exposure happens without you being present with the only exception being that recorded video saved. This, of course, can be very good if it is not ‘your fault’ and very bad if it is ‘your fault’. For sake of discussing the insurance exposure, I have removed potential pet escapes from homes, but pet mishaps with entering a home are a very large exposure for the insurance carrier that will be met by insurance carriers increasing premiums or excluding coverage.”
Analyzing the insurance implication of the Amazon Key, Macauley stated “As the leader in pricing analytics in property and casualty insurance, Quadrant has analyzed the market for 27 years. With technologies such as Amazon Key, slipping on a item on your floor by the delivery carrier may happen and it is even video taped. Under the current insurance policy, the claim is covered. However, in the future, carriers will most probably itemize the exposure and even exclude them”.
Insurance risks may be a challenge for Amazon Key
There are always challenges with every new product; however, it is advised that, until the insurance policies are directly spelled out with the right risk management, efforts should be made to get clarity about the insurance risks of the Amazon Key before getting it installed. The insurance industry should prepare for insurance coverage of the Amazon key as it creates a higher opportunity for Prime members; this is necessary to cover for the emerging risks and the potential impact this Amazon Key would create in the long term.
“There are just so many things that can go wrong with this service – I’d advise waiting to see how it rolls out and how the above concerns are addressed before jumping on the service,” says Macaulay
