Smart home insurance discounts - Bankrate.com

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A smart home is one where appliances and devices are wirelessly connected to give the homeowner access and control from anywhere. Insurance companies are increasingly interested in the growing use of smart technology in homes. Smart home technology protects homes by making them more secure and potentially reducing the possibility of damage caused by perils like fires or theft.

Smart home systems also provide data to insurance companies, helping them determine risks and costs for insurance. System sensors can detect smoke, water damage, leaks and other potential problems, alerting the homeowner through their phone. Smart home discounts are the insurance company’s way of incentivizing occupants to invest in smart home technology.

Types of smart home insurance discounts

While insurance premium discounts are common ways insurance companies incentivize customers to take specific actions, there are also other ways providers reward people who use smart home systems. Some insurers offer discounts on the system itself and may even reduce or waive the installation fee entirely.

Which smart home devices qualify?

While each insurance company has unique discounts, these are some of the common smart devices providers might offer incentives for installing in your home:

• Smart thermostats
• Security systems that include window and door sensors, smart locks or video doorbells (most providers will not offer a discount for individual components like locks or sensors)
• Amazon Echo Dot
• Automatic interior sprinkler systems
• Gas and water shutoff sensors
• Smart fire alarm systems or smoke detectors

How much will I save?

The savings you will receive for installing smart home technology in your home varies by the insurance company. Most insurers offer discounts between 5%-20% on your homeowners insurance premium, depending on the smart device and its ability to reduce your likelihood of filing a claim. Some insurance companies may offer more than one smart home discount, which allows you to stack the savings together.

But the savings don’t end there. Many larger insurance companies offer free or reduced costs for systems, activation and installation fees, providing even more savings. Liberty Mutual has partnered with Vivint to provide $0 activation and installation fees plus $100 off select smart home devices. Amazon partners with Travelers to offer new home insurance customers a free Echo Dot in qualifying states.

Insurance company discounts for smart devices

As more people become interested in smart home technology, insurance companies are taking note and partnering with companies offering devices. Here are a few partnerships with home insurance companies that could help you save on smart home technology:

• Allstate: Partnered with Canary, Allstate offers a 5% discount on homeowners insurance and $20 off the cost for an annual membership with Canary HD security cameras.
• American Family: AmFam partners with Frontpoint Home Security Systems. Frontpoint offers a control panel, security cameras, locks and sensors for homeowners to install themselves, saving on installation fees. Monitoring plans start at $10 per month with Frontpoint, and American Family customers can purchase the basic Frontpoint system for $99.95 with a 36-month price guarantee on monitoring services and save up to 5% on their home insurance premiums.
• Amica: The Flo by Moen Smart Water Security System learns your home’s water usage and can automatically shut off the water if a failure occurs. Homeowners can also control their water shutoff remotely. Amica homeowners discounts vary by state, but the normally $800 system is only $350 for Amica policyholders.
• Hippo: Hippo Insurance partners with SimpliSafe, Notion and Kangaroo to offer free systems to its policyholders in select states. Self-monitoring systems include a 10% homeowners discount, while professionally monitored systems net up to 13% savings.
• State Farm: Homeowners in Arizona, California, Ohio and Texas can get a free Ting if insured with State Farm. There is no discount on the home policy, but State Farm pays for the hardwire and three years of service. Ting monitors for electrical hazards and power quality and offers State Farm policyholders $1,000 in hazard repair credits to fix hazards using a licensed electrician.
• USAA: Partnered with ADT home security systems, USAA customers can save up to 15% on self-installed systems and get 10% off monthly monitoring, plus a discount of up to 10% on homeowners insurance premiums.

Pros and cons of smart home discounts

Smart home technology is more affordable than ever, especially with some of the discounts, incentives and rebates offered by homeowners insurance companies. However, with convenience and technology comes risk. Here are the pros and cons of smart home technology.

Pros

• Added security: Smart home devices can deter criminals from breaking into your home and will automatically alert you and the authorities if it happens.
• Convenience: With automated systems easily controlled through a smartphone, homeowners can change their thermostat, turn on lights or be alerted to potential hazards at any time.
• Energy savings: Smart home systems allow pre-programmed settings to change automatically throughout the day and can monitor energy and water usage, making the homeowner more aware and more easily able to change their habits to reduce energy usage. Utility demand response programs can also reduce energy usage during peak times.
• Universal apps: Wi-fi enabled smart home hubs can usually be controlled from one app to turn on the lights, unlock the door, set the alarm, change the thermostat and more.

Cons

• Cost: While some home insurance companies offer incentives and rebates for equipment, homeowners usually have to pay for monitoring and the remaining cost of smart home systems. Homeowners also must have a strong internet connection for most systems to work properly.
• Cybersecurity: With smart home systems attached to the internet, cybercrime is a possibility. Hackers may be able to access your smart home devices, which could give them access to private information. Keep passwords complex and update the apps used for the devices as needed.
• Learning curve: While some smart home systems are easy to install and learn, some are more challenging and may be harder for people who are not tech-savvy.
• Outages: If the internet or power goes out, some systems have battery backups while others do not, which can limit or eliminate functionality until it is restored. Outages can especially be a problem if you live in an area prone to strong storms.

Are smart home discounts worth it?

The best way to know if it is worth installing a smart home device or system is to determine how much savings you will receive on your homeowners insurance with the discount. Then, determine how much the system will cost with the incentives and rebates included. For systems requiring monitoring, like burglar and fire alarms, consider the monthly or annual cost of monitoring services. Insurance companies will likely continue to improve the discounts associated with smart devices as the technology improves even more and they become more common in homes across the country

Worth the investment

• American Family: If you do not already have a smart home system, the discounted basic system and 36-month price lock on monitoring from FrontPoint may be worth it.
• Amica: The savings on the water usage monitoring system may be worth it if you need one anyway.
• Hippo: The self-monitored system is free with a 10% homeowners insurance discount, and the discount is even higher at 13% with professional monitoring. Since Hippo focuses on smart homes, they already offer various options for security system providers, and its customers will likely see even more discounts from this provider in the future.
• State Farm: A free Ting for three years with a $1,000 repair credit is hard to beat, even without a homeowners discount.

Probably not worth the investment

• Allstate: A $20 annual membership discount for Canary HD camera and 5% off homeowners insurance means this discount may not be worth the money unless you do not have a camera and need one.
• USAA: Considering the cost of an ADT system, even with discounted monitoring and savings on your home policy, you may be able to get a smart security system for cheaper.

When considering the discount savings on homeowners insurance, weigh the pros and cons of installing a smart home device to know if it is worth the investment. Smart home systems can protect your home and reduce damage with an early alert but come with the risk of cyber-hacking and may have a higher out-of-pocket cost, negating the savings on your homeowners insurance policy.

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