Many homeowners are investing in smart home devices. From water sensors to security systems, these devices can help keep homes safe and secure – and they may also allow homeowners to get a smart home insurance discount.
The Rise of Smart Home Technology
The term smart home device typically refers to any internet-connected device or appliance. A home equipped with these tools is often called a smart home. Some of the most common smart home devices include:
- Smart home security systems, which allow homeowners to check on their homes when they’re out and send alerts if anyone enters their property
- Smart refrigerators, which help users keep track of the food they have and what they need to buy
- Smart thermostats and blinds, which let users control their home’s temperature and natural lighting remotely
- Smart sensors, which monitor homes for water leaks
- Smart smoke detectors and fire alarms, which notify users of fire or smoke-related dangers, even if they’re away from home
Smart home technology is a booming industry. In 2023, the global smart home market was valued at $101 billion, according to Fortune Business Insights. By 2032, it’s projected to reach $633 billion. With increased access to Wi-Fi, 5G networks and AI-enabled devices, there’s growing interest in tools that allow users to manage their home security from anywhere.
How Smart Home Devices Could Prevent Losses
Although some smart devices are primarily for convenience, some can help prevent losses through smart home monitoring. Consider the following scenarios:
- You’re out grocery shopping when you receive an alert on your phone. Your smart smoke detector has gone off. You hurry home and discover you accidentally left the oven on, which has spread smoke into your kitchen. You quickly turn the oven off and open a window to let out the smoke. Thankfully, there’s no major damage – but if you hadn’t received the alert and hurried home, there could have been a fire.
- You receive an alert on your phone from your smart water detector. It detected water in your basement bathroom and, when you go downstairs to check, you find a small leak. You don’t go down to the basement often, so without the alert, you probably would not have noticed the leak until it had already caused considerable damage – likely mold – to the wall. You call a plumber to fix the leak and, thankfully, it’s an easy repair and there’s no damage to the walls or floor.
- You receive an alert on your phone while you’re at work that someone is at your back door. You check the live footage through your smart security system and, to your surprise, see that two men are trying to break into your home. You use the system’s speaker to tell the intruders that the police are on the way and they flee. You call the police, who confirm that everything is fine except for a few scratches on the door where the intruders were trying to break in. If you didn’t receive the alert, the intruders would have had ample time to steal your belongings.
Can you receive an insurance discount for smart home devices?
Homeowners can use smart home devices to keep their houses safe and secure, but they aren’t the only ones who could benefit. These devices may also benefit the insurance carriers that provide their homeowners’ insurance. Smart home devices could help reduce the number and severity of homeowners’ insurance claims by preventing burglaries, catching fires before they spread and identifying leaks – all of which could save insurance providers money.
Because of the potential for risk reduction, home insurers may offer discounts to policyholders with smart home devices. However, discounts can vary widely in eligibility and amount depending on the type of smart home device and the insurance provider.
For example, you’re more likely to receive a premium discount because you have a smart water sensor or smart security system than if you have a smart refrigerator. While a smart fridge may be convenient, from your insurance carrier’s perspective, it doesn’t play a role in reducing risks – but water sensors and a security system can.
Potential Downsides to Smart Home Devices
Although there can be many benefits to smart home devices, there may also be drawbacks.
Cybersecurity is one possible downside. Smart devices are connected to the internet, which means they are susceptible to cyberattacks. In addition, homeowners may neglect the cybersecurity of smart home devices. For example, users may use the default password instead of creating a unique password. This could make it easy for hackers to gain access to these devices.
This doesn’t mean you should avoid smart home devices entirely, but it does mean that you should take steps to secure them:
- Update your devices as soon as software updates and security patches become available.
- Avoid using the default username or password for devices, routers or smartphones.
- Use multi-factor authentication in addition to strong passwords.
- Avoid logging into accounts using public Wi-Fi.
Are smart home devices worth it?
While smart home devices could help you save on your home insurance, even if you don’t receive a discount, investing in this technology may be worthwhile. Smart home devices could help:
- Provide peace of mind. If you’re worried about your home when you’re away, you might enjoy the peace of mind that comes with being able to check on it remotely.
- Prevent nightmare scenarios. Even with insurance coverage, a house fire, burglary or severe plumbing leak can be a horrible experience. Some belongings like photographs and heirlooms are irreplaceable, and there’s also the possibility that you or a family member could be hurt. Smart home devices can help to prevent disasters.
- Save money on insurance, even if you don’t receive a discount. When insurers determine the cost of homeowners’ insurance, they take past claims into account. If you have a lot of claims or severe claims, insurers may charge you higher rates or even refuse you coverage. A smart home monitoring system can help prevent claims, which could keep your long-term insurance costs down.
Whether you currently use smart home devices or are considering adding them, having the right homeowners’ insurance is essential. Higginbotham can help you understand your options and find insurance solutions that align with your needs. Request a free quote today to get in touch with a member of our personal insurance team.
