Smart home devices that can lower your insurance premiums – InsuranceNewsNet


Smart home devices that owners install in their homes for security or to keep an eye on their pets can do more than give you peace of mind: they can lower your insurance premiums. Smart home devices could reduce premiums by 10% to 15%, said Pat Howard, editor at Policygenius, who is also an insurance agent. This could mean a saving of $100 or more per year for many owners, partially offsetting the cost of appliances. “Protected devices make your home safer,” he said. “Insurance companies will offer credits and discounts.” There is no hard and fast rule on how much a homeowner can save. It depends on an assortment of factors such as the insurance company, the types of devices the owner uses, the current credits and rebates the owner is currently getting, and the state the policyholder lives in. Not all companies offer discounts and not all devices are eligible for discounts.

“They’re not widespread, but they’re becoming more common,” he said of smart home discounts.

Nationwide, based in Columbus, for example, has a policy that can offer up to 10% reduction that applies to home, water and theft risks in most states. Policyholders can also get a 50% discount on select kits from Notion, which makes smart home monitoring systems that homeowners can install.

Insurers recognize the value of partnering with companies that manufacture these devices that can prevent losses, said Sarah JacobsVice President of Personal Lines Product Development at Nationwide.

“If we can save money on claims, we can pass it on to consumers,” she said.

Nearly two-thirds of owners own at least one smart home device, but many don’t realize the devices can lower their insurance premiums, according to a national survey of 1,500 owners last August.

A 2020 survey by Policygenius, an online insurance marketplace, found that 40.4% of homeowners were unaware that installing a security system in their home could lower their premiums.

Video doorbells, home security cameras and smart thermostats are the most popular items, according to Nationwide’s survey. Other devices monitor water leaks, smoke and carbon dioxide alarms, and doors and windows.

Nationwide partnered with Notion in 2020 to offer technology that homeowners can use to do things like monitor the home for open doors and windows, smoke and carbon dioxide detectors, and water leaks with a mobile phone.

state farm, the state’s largest homeowners insurer, says it provides fire, smoke or burglar alarms or other home monitoring systems. It does not offer discounts for the water leak detection system.

Smart home devices

can catch water leaks

While customers are aware of video doorbells and other home security devices, there isn’t as much focus on devices that can prevent what is one of the costliest insurance claims: water leaks.

The Nationwide survey found that only 7% of homeowners use smart sensors that monitor water leaks. Only 27% say they know about sensors that monitor water flow and leaks, and 24% say they know about sensors that can shut off water in the event of a leak.

Water is the third leading cause of home insurance claims, with an average of $11,098 per claim, according to the Insurance Information Institutean industrial group.

According to Nationwide, water sensors can reduce premiums by 4%, a savings of $50 for $55 per year for many policyholders, Jacobs said.

“People think safety is most important,” Jacobs said. “From a claims perspective, there’s an eight times greater chance of having water loss in your home.”

Over time, the savings can offset the cost of sensors, she said, though many homeowners are getting smart home devices for peace of mind.

The cell phone that warned

from a gushing hot water tank

michelle hancock53 years old, from Monroe, Washingtonclose Seattle, was on her way to a five-day camping trip when “My cell phone started freaking out,” she said of the alerts she was getting from the app on her phone. “He tells me there is water in the house.”

Hancock installed the Notion system in her home in 2018. The system consists of a series of sensors – each the size of an Oreo cookie – that she placed around the pipes and her hot water tank.

She was able to call her daughter, who went to Hancock’s, found water spewing from the hot water tank and turned the water off.

If not for the alarm on her phone, Hancock wouldn’t have known what had happened to her water tank until she got home a few days later.

The leak reportedly caused at least thousands of dollars in damage to his 1,200 square foot basement and endangered generations of family photos.

“People don’t understand water. It’s very insidious,” she said.

Hancock, who owns an insurance agency, has the first steps in place to protect her pets. She hadn’t considered the possibility that the devices could save her money on her premiums.

She said a client had a fire in her home that killed her pets.

“It resonated with me very quickly. Oh my God, no one would know,” she said.

If there was an alert on her phone that a smoke detector had gone off, she might rush home or ask a neighbor to check or call the fire department.

The Notion system does not detect smoke, but it hears the smoke detector and will activate the app on its phone, she said.

“If you can prevent these losses, it will affect things on a much larger scale,” she said.

In the case of water, a homeowner may not notice if a toilet, faucet, or washing machine is leaking. The devices can also detect a sharp drop or rise in temperature in the home, a possible sign of a fried oven that could cause pipes to freeze and burst.

She also installed similar sensors from Roost and has a doorbell that activates her phone when someone comes to the door.

“I couldn’t be a bigger fan of these devices,” she said. “I just wish we put them in the hands of more people.”

How to get discounts

on home insurance

Research has shown that many homeowners don’t fully understand how homeowners insurance works and what drives rates, said Howard, editor of Policygenius. They also tend to stay with the same company.

Howard cautioned that there may be nuance when it comes to devices and their eligibility for discounts.

Insurance companies distinguish between a home with a video doorbell, for example, and a full security system with central monitoring when it comes to discounts, he said.

There might also be better ways to save money, like raising the deductible, bundling home and auto policies, or shopping around for a new policy, which Howard recommends homeowners do every year.

“Home insurance tends to be set and forget,” he said.

So, before purchasing a smart home device, owners should first check with their insurer if the company offers discounts for their installation or if it has a partnership with an appliance company such as Notion that could offer products at reduced prices. Insurers may also be able to provide advice on which products work best, he said.

“You don’t want to invest in something that doesn’t do what you want it to do,” he said.

Regardless of getting a discount or not, the devices will gain popularity with owners, he said.

“People love to lock the front door of the Bahamian or adjust the thermostat,” he said

Images: getty


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