Smart home devices that people are putting in their homes for security or to keep an eye on their pets may do more than just bring peace of mind: they may also help you save money on your insurance.
According to Pat Howard, senior editor at Policy genius and also an insurance agent, smart home devices may be able to reduce rates by 10% to 15%. Many households might save $100 or more each year as a result, partially compensating the cost of the devices.
He stated, “Protected devices make your house safer.” “There will be credits and discounts from insurance providers.”
There is no set limit to how much a homeowner may save.
It is determined by a number of criteria, including the insurance provider, the sorts of devices the homeowner uses, current credits and discounts, and the state in which the policyholder resides. Discounts are not offered by all firms, and not all gadgets are eligible for discounts.
“They’re not universal,” he said of smart home discounts, “but they’re getting more and more popular.”
For example, Nationwide, situated in Columbus, provides a policy that can provide up to a 10% reduction on home, water, and theft hazards in most states. Policyholders may also get a 50% discount on select Notion kits, which are smart home monitoring systems that can be installed by homeowners.
According to Sarah Jacobs, Nationwide’s vice president of personal lines product development, “insurers see the potential in partnering with firms that manufacture these devices that help reduce losses.”
“If we save money on claims, we can pass those savings on to customers,” she explained.
According to a nationwide poll of 1,500 homes conducted in August, over two-thirds of homeowners had at least one smart home device, yet many are unaware that the gadgets can lower their insurance costs.
According to a 2020 poll conducted by Policy Genius, an online insurance marketplace, 40.4 percent of homeowners were unaware that putting a security system in their house may lower their premiums.
Video doorbells, home security cameras, and smart thermostats are the most popular items, the nationwide survey showed. 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 can do such things as watch the home for open doors and windows, smoke and carbon dioxide alarms, and water leaks with a cell phone.
Water leaks can be detected by smart home systems.
Customers are aware of video doorbells and other home security equipment, but less attention is paid to gadgets that might avoid one of the most expensive insurance claims: water leaks.
Only 7% of homes use smart sensors to detect water leaks, according to a nationwide survey. Only 27% of people are aware of sensors that monitor water flow and leaks, and only 24% are aware of sensors that can cut off the water in the event of a leak.
According to the Insurance Information Institute, water is the third-leading cause of homeowner insurance claims, costing an average of $11,098 each claim.
Nationwide says the water sensors can reduce premiums by 4%, a savings of $50 to $55 per year for many policyholders, Jacobs said.
“People think security is the most important,” Jacobs said. “From a claims perspective, it is eight times more likely to have a water loss in your home.”
Over time, the savings can offset the cost of the sensors, she said, though many homeowners get smart home devices for peace of mind.
The phone that alerted me to a leaking hot water tank
Michelle Hancock, 53, of Monroe, Washington, near Seattle, was on her way to a five-day camping vacation when the warnings she was receiving from the app on her phone “started freaking out,” she said. “It’s telling me there’s water in the home,” says the narrator.
In 2018, Hancock installed the Notion system in her home. She installed a network of sensors around her pipes and hot water tank, each roughly the size of an Oreo cookie.
She was able to contact her daughter, who raced to Hancock’s house and saw water gushing from the hot water tank, which she quickly turned off.
According to her, the Notion system does not detect smoke, but it does hear the smoke alarm and activates the app on her phone.
“If you can prevent these losses, it has a far larger impact,” she explained.
When it comes to water, a leaking toilet, faucet, or washing machine may go unnoticed by the homeowner. The gadgets may also detect a significant reduction or rise in indoor temperature, which could indicate a faulty furnace causing pipes to freeze and break.
How to Get Home Insurance Discounts
According to Howard, the senior editor at Policy genius, “research has revealed that many homeowners don’t completely grasp how homeowner insurance works and what drives premiums.” They also have a tendency to continue with the same business.
When it comes to gadgets and their eligibility for discounts, Howard cautioned that there might be complexities.
When it comes to savings, insurance companies differentiate between a home with a video doorbell, for example, and a home with a comprehensive security system with central monitoring, he added.
There may also be more cost-effective options, including boosting the deductible, consolidating home and vehicle insurance, or searching for new coverage, which Howard advises homeowners to do at least once a year.
Before purchasing any smart home device, homeowners should check with their insurance provider to see if they give any discounts for installation or if they have a connection with a device business like Notion that may sell items at a discounted price. Insurers may also be able to advise on which products are most effective, he added.
He explained, “You don’t want to invest in something that doesn’t accomplish what you want it to do.”
Whether or whether a discount is obtained, the gadgets will rise in popularity among homeowners, he said.
“From the Bahamas, people like locking the front door or regulating the heat,” he remarked.