Smart home insurance discounts

A smart home is one in which appliances and devices are wirelessly linked to provide the homeowner with access and control from any location. Insurance companies are becoming more interested in the increasing use of smart technology in the home. Smart home technology protects homes by making them more secure and potentially reducing the risk of damage caused by hazards such as fires or theft.

Smart home systems also provide data to insurance companies, assisting them in determining risks and insurance costs. Smoke, water damage, leaks, and other potential problems can be detected by system sensors, which alert the homeowner via their phone. Smart home discounts are a way for insurance companies to encourage occupants to invest in smart home technology.

Types of smart home insurance discounts

While insurance premium discounts are a common way for insurers to incentivize customers to take specific actions, there are other ways providers reward people who use smart home systems. Some insurance companies provide 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 its own set of discounts, the following are some of the most common smart devices that providers may offer incentives for installing in your home:

  • Smart thermostats
  • Window and door sensors, smart locks, and video doorbells are examples of security systems (most providers will not offer a discount for individual components like locks or sensors)
  • The Amazon Echo Dot
  • Interior sprinkler systems that operate automatically
  • Sensors for gas and water shutoff
  • Smoke detectors or smart fire alarm systems

How much will I save?

The amount of money you will save by installing smart home technology in your home varies depending on the insurance company. Depending on the smart device and its ability to reduce your likelihood of filing a claim, most insurers offer discounts ranging from 5% to 20% off your homeowners insurance premium. Some insurance companies may provide more than one smart home discount, allowing you to stack the savings.

However, the savings do not stop there. Many larger insurance companies provide free or reduced costs for system, activation, and installation fees, allowing for even greater savings. Liberty Mutual has teamed up with Vivint to offer $0 activation and installation fees, as well as $100 off select smart home devices. Amazon has partnered with Travelers to provide new home insurance customers in qualifying states with a free Echo Dot.

Insurance company discounts for smart devices

As more people become interested in smart home technology, insurance companies are taking notice and collaborating with device providers. Here are some collaborations with home insurance companies that may help you save money on smart home technology:

  • Allstate: As a Canary partner, Allstate offers a 5% discount on homeowners insurance and a $20 discount on an annual membership with Canary HD security cameras.
  • American Family: AmFam collaborates with Frontpoint Home Security Systems. Frontpoint provides a control panel, security cameras, locks, and sensors that can be installed by homeowners themselves, saving money on installation fees. Frontpoint monitoring plans begin at $10 per month, 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 shut off the water automatically if a failure occurs. Homeowners can also remotely control their water shutoff. Amica homeowner discounts vary by state, but the normally $800 system costs only $350 to Amica policyholders.
  • Hippo: Hippo Insurance collaborates with SimpliSafe, Notion, and Kangaroo to provide free systems to policyholders in select states. Self-monitoring systems come with a 10% homeowner discount, whereas professionally monitored systems can save you up to 13%.
  • State Farm: Homeowners in Arizona, California, Ohio, and Texas who have State Farm insurance can get a free Ting. The home policy is not discounted, but State Farm pays for the hardwire and three years of service. Ting monitors electrical hazards and power quality and offers $1,000 in hazard repair credits to State Farm policyholders who fix hazards with the help of a licensed electrician.
  • USAA: Through a partnership with ADT home security systems, USAA customers can save up to 15% on self-installed systems and receive 10% off monthly monitoring, as well as a 10% discount on homeowners insurance premiums.

Pros and cons of smart home discounts

Smart home technology is now more affordable than ever, thanks to discounts, incentives, and rebates provided by homeowners insurance companies. However, convenience and technology are not without risk. Here are the benefits and drawbacks of smart home technology.

Pros

  • Added security: Smart home devices can deter criminals from breaking into your home and will automatically notify you and the authorities if this occurs.
  • Convenience: With automated systems that can be controlled remotely via 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 able to change their habits to reduce energy consumption. Utility demand response programs can also help to reduce energy consumption during peak hours.
  • Universal apps: Wi-Fi enabled smart home hubs can typically be controlled from a single 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 equipment incentives and rebates, homeowners are usually responsible for monitoring and the remaining cost of smart home systems. For most systems to function properly, homeowners must also have a strong internet connection.
  • Cybersecurity: Cybercrime is a possibility with smart home systems that are connected to the internet. Hackers may be able to gain access to your smart home devices, giving them access to sensitive information. Passwords should be complex, and devices' apps should be updated as needed.
  • Learning curve: While some smart home systems are simple to install and learn, others are more difficult and may be more difficult for people who are not tech-savvy.
  • Outages: If the internet or power go down, some systems have battery backups, while others do not, limiting or eliminating functionality until it is restored. Outages are especially problematic if you live in a storm-prone area.

Are smart home discounts worth it?

The best way to determine whether it is worthwhile to install a smart home device or system is to calculate how much money you will save on your homeowners insurance with the discount. Then, figure out how much the system will cost after incentives and rebates are applied. Consider the monthly or annual cost of monitoring services for systems that require monitoring, such as burglar and fire alarms. Insurance companies are likely to increase the discounts associated with smart devices as technology advances and they become more common in homes across the country.

Worth the investment

  • American Family: If you don't already have a smart home system, FrontPoint's discounted basic system and 36-month price lock on monitoring may be worth it.
  • Amica: If you need a water usage monitoring system anyway, the savings may be worth it.
  • Hippo: The self-monitored system is free with a ten percent home insurance discount, and the discount is even higher with professional monitoring, at thirteen percent. Because Hippo focuses on smart homes, they already provide a variety of options for security system providers, and its customers can expect even more discounts from this provider in the future.
  • State Farm: Even without a homeowners discount, a free Ting for three years with a $1,000 repair credit is hard to beat.

Probably not worth the investment

  • Allstate: With a $20 annual membership discount for Canary HD cameras and a 5% discount on homeowners insurance, this discount may not be worth it unless you don't have one and need one.
  • USAA: When you consider 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 less.

When considering the discount savings on homeowners insurance, weigh the benefits and drawbacks of installing a smart home device to determine if the investment is worthwhile. Smart home systems can protect your home and reduce damage by providing an early warning, but they also pose a risk of cyber-hacking and may result in a higher out-of-pocket cost, cancelling out the savings on your homeowners insurance policy.