Smart Home Devices That Could Lower Your Insurance Costs

Smart Home Devices That Could Lower Your Insurance Costs

Upgrading your home to make it "smart" can be costly—and overwhelming. But you don't need to switch out all your devices to enjoy an insurance discount. If you don't know where to start, consider the following smart home devices that may lower your homeowners insurance costs.

• Smart security cameras
• Smart smoke detectors
• Smart water leak detectors
• Smart thermostats
• Smart plugs

Smart Security Cameras

Smart security cameras not only alert you when someone approaches your door, they can help you track packages, communicate with guests and may even ward off potential thieves. In a University of North Carolina Department of Criminal Justice and Criminology survey of more than 400 burglars, half of them considered outdoor security cameras to be an effective deterrent.

Security cameras can monitor both the inside and outside of your home, and, depending on the model, offer a range of recording and communication features. These devices cost anywhere from under $20 to several hundred dollars, and some have ongoing subscription costs as well.

Smart Smoke Detectors

Traditional smoke detectors may do a good job of alerting you of danger when you're home, but what if a fire starts while you're away?

Smart smoke detectors can send a notification to your phone if they detect smoke. They can also notify you of a low battery, tell you the location of a fire and even alert the fire department. Prices for smart smoke detectors range widely, from under $50 to nearly $200.

Smart Water Leak Detectors

About 1 in 60 insured homes has a claim related to water damage or freezing, according to the Insurance Information Institute. These incidents are also potentially preventable with a smart water leak detector.

Smart leak detectors can provide 24/7 monitoring, notifying you of moisture that can lead to expensive problems like mold, rot or cracks. Like other smart devices, smart leak detectors can alert you to concerns via smartphone notifications. Several models sell for less than $50.

Learn more: Does Homeowners Insurance Cover Water Damage?

Smart Thermostats

Smart thermostats allow you to program heating and cooling schedules so your home's temperature adjusts without you having to think about it. Many models even let you adjust your thermostat remotely with your smartphone.

With a smart thermostat, savings will likely come from your utility company in the form of lower heating and cooling costs rather than on your homeowners insurance premiums directly. But they can help you keep your home's temperature regulated, reducing the chances of costly issues such as frozen pipes.

Smart thermostats often cost between $100 and $300, depending on their capabilities.

Smart Plugs

Smart plugs can turn any electrical appliance into a smart device, making them a versatile addition to any smart home. Smart plugs are Wi-Fi-enabled adapters that plug into your regular power outlets, allowing you to control the flow of power to any devices plugged into them.

For example, if you plug your space heater into a smart plug and forget to turn it off before you leave home, you can remotely turn off the heater using your phone.

Similar to smart thermostats, smart plugs are unlikely to lead to direct premium savings, but they can help you reduce the risk of hazards that could cause you to file a claim.

Fortunately, smart plugs are a relatively inexpensive smart home device—you can easily get several for under $50.

Why Insurance Companies Reward Smart Home Devices

The appeal of smart home devices doesn't end with you—insurance companies like them too. Many insurers reward the use of smart home devices with discounts that lower your premium. But why are insurance companies so keen on these gadgets? Essentially, for the same reasons you are.

When you install a smart smoke detector, a leak detector, a security camera or other smart home device, you're reducing the likelihood of damage or theft to your home. For example, a security camera might discourage burglary, and a leak detector could help you prevent serious water damage.

Because these devices can prevent or reduce damages, they can also lower the likelihood of you filing a claim—saving your insurer time and money.

Learn more: What Is Not Covered by Homeowners Insurance?

Companies That Offer Discounts for Smart Home Devices

If you're considering buying smart home devices to both make your life easier and save money on home insurance, confirm your carrier offers smart home discounts. If your current provider doesn't offer any of these discounts, you might even weigh the pros and cons of switching home insurance policies.

Here are some major insurance companies that offer smart home discounts:

• Allstate: Allstate offers discounts for certain smart home safety features to protect your home from theft or fire. They also partner with Canary, a home security company, to offer a 5% discount on insurance when customers use a Canary security system.
• Chubb: There are several ways to score a smart home discount with Chubb. Some include installing a leak detector, a smart thermostat or a 24-hour security alarm. You can even get up to 35% off the price of certain systems with Chubb homeowners insurance.
• State Farm: State Farm provides discounts for home security measures for theft and fire protection. They also partner with ADT to provide a free water leak detection package, plus discounts on other products and services.
• USAA: Using USAA's Connected Home program and partnerships with home security companies Roost and Resideo, customers can save on both smart home devices and homeowners insurance premiums. To start earning the insurance discount, you must connect at least two water leak detectors and share your data with USAA.
• Hippo: Hippo's smart home incentives are unique in that the company provides a complimentary smart home monitoring system—and an attached discount—as part of your home insurance policy. To keep the discount, you just have to keep your system activated. According to Hippo, customers save an average of $64 to $91 per year.

Learn more: Factors That Impact the Cost of Homeowners Insurance

Should You Install Smart Home Devices?

Smart home devices can add convenience to your life and save you money on insurance. But they're not a perfect solution for everyone, and there may be some downsides to consider.

For example, the cost of some of these technologies may be prohibitive. Some devices require ongoing subscription costs, which you should factor into your budget. While some smart home gadgets may save you money eventually, you'll generally have to spend some cash upfront. It may be worth running the numbers to see how long it will take for your home insurance discount to cover the cost of any new equipment.

The good news is that you don't have to update all your gadgets and appliances to lower your insurance costs. And depending on your house, neighborhood and habits, certain devices may give you a bigger bang for your buck.

Keep in mind that there can be security risks with smart devices. Hackers may be able to access your information via home security systems, smart speakers and other technology. For this reason, choose your devices carefully, check product reviews and use strong passwords.

Of course, smart devices can add value to your home beyond simple cost savings. If security is a priority—especially if crime or severe weather events are common where you live—smart devices may be worth it, if only for your peace of mind.

The Bottom Line

Your home may be your most valuable asset, and insuring it can be expensive. To help protect your home and potentially lower your home insurance premiums, consider installing smart home devices.

While some devices can be pricey, home insurance discounts might outweigh these costs over time. If you're considering upgrading to smart devices, choose those that will have the biggest financial and safety impacts on your home. And if you already use smart devices but aren't getting a discount, check with your insurer to see what savings they can offer.