How a smart home can get you a discount on home insurance

This article is reproduced with permission from NerdWallet.

A smart thermostat can turn up the heat in your home before you get out of bed. A smart speaker can play your favorite podcasts with voice command. A smart bulb can be turned on or off from across the room.

But smart home devices aren’t just about convenience. Because some of them can help keep your home safe and secure, they could also earn you a discount on your home insurance.

Discounts for smart home devices

NerdWallet contacted a dozen insurance companies and found that most offered discounts for homeowners with smart devices designed to prevent water damage, fire, or theft. In our research, we found companies advertising home insurance discount up to 13%, depending on the device and where you live.

Of the companies we surveyed, the most common smart devices eligible for discounts were water leak sensors, security cameras, and smoke detectors. However, insurers like Farmers and Lemonade also offer savings on smart locks, while Amica and Farmers offer discounts on motion sensors.

If you already have a smart home device, ask your carrier if you’re eligible for a discount.

Some insurers have partnered with smart home tech companies to make devices more affordable, or even provide them for free. For example, State Farm policyholders in most states can purchase three years of free Ting service. Ting provides a plug-in that monitors your home for electrical issues that could cause fires.

Hippopotamus, a home insurance startup, is offering policyholders in eligible states free smart watch kits from partners like Kangaroo and SimpliSafe. As long as the insured installs the devices and keeps them active, they can save up to 13% on their home insurance.

Amica policyholders can save when buying select smart home devices from Moen, Guardian or Kangaroo, while Nationwide is offering nearly 50% off the purchase of Notion smart sensors. These savings are in addition to any home insurance discounts companies will give you once you install the devices.

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Why insurance companies reward smart devices

Insurance companies are offering discounts on smart home devices because the technology can help catch problems earlier, avoiding costly claims.

Suppose you have a smart water sensor next to your water heater and the device has a leak. The device can sound an alarm and send an alert to your phone, allowing you to take immediate action. (Some devices even have an automatic water shut-off feature.)

Without the sensor, you might end up file a claim, paying a hefty deductible and having contractors in your basement to clean up the mess, says Brett Sobol, growth initiatives manager at Hippo. But with the sensor, the damage could be so limited that you wouldn’t need to file a claim at all.

“The best experience is one where there are no claims,” ​​says Sobol.

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Should you buy smart home devices?

The cost of smart home technology can add up quickly. If you want to invest in a protective device but aren’t sure which ones are worth it, consider your home’s unique risks, says Karen Collins, assistant vice president of personal lines at the American Property Casualty Insurance Association.

For example, if your home has older plumbing, water sensors might be worth buying, Collins says. But if you live in a neighborhood with a high crime rate, your money might be better spent on a home security system.

For many homeowners, water sensors are a good bet, according to Sobol. “Water damage is by far the most common claim” that smart home devices can help prevent, Sobol says. Placing sensors in bathrooms, in basements and under appliances “can [keep] small claims to turn into big ones.

Ask your insurer if the appliances you’re considering would qualify you for a home insurance discount. Depending on the amount of the rebate and the cost of the devices, they could pay for themselves in a few years.

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Keep in mind that the benefits of smart home technology could go beyond insurance savings. “Investing in smart home technology can provide customers with peace of mind,” says Sobol, “knowing that their home is better protected.”

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Sarah Schlichter writes for NerdWallet. Email: sschlichter@nerdwallet.com.

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