Do Smart Homes Cost Less to Insure?
Technology is everywhere, and its application seems to be ever-expanding. The auto insurance world is already providing personalized discounts to drivers who voluntarily use driving tracking gadgets – is the home insurance world far behind? Will there soon by discounts for homeowners with internet-connected safety systems?
From app-connected doorbells to smart smoke detectors and remote lighting and temperature control (even WiFi-enabled fridges that tell you when you’re low on eggs), homeowners are hooking up to WiFi. But, according to the Wall Street Journal, the technology that promises to prevent damage and loss doesn’t yet translate to a safer house in the eyes of insurance companies.
Yes, the insurance industry is hearing from customers who want discounts for the devices they’ve added to their home, but there isn’t yet meaningful data that proves the devices actually improve security, or prevent significant loss, or reduce the replacement costs of a home and the items within it. Despite the lack of significant data-based proof, individual homeowners like these connected security devices and claim they already feel safer.
But if/when these technology-based home security devices prove meaningful in improving home security and preventing damage or loss over time, the insurance industry may indeed respond by reducing rates. Some insurers are already offering small discounts for connected devices while they test their efficacy, but not in amounts that significantly reduce average premiums across the board. According to the WSJ the average premium in the U.S. for homes is predicted to increase 5.5% this year.
But unlike the auto-insurance industry, where drivers can get discounts of as much as 30% for agreeing to use technology that monitors their driving habits, experts say it could be several years before there’s enough data about smart-home devices to offer similar discounts in the home insurance world.
Technology certainly introduces exciting possibilities. It bears watching how the data stacks up to see if these connected devices and gadgets significantly reduce damage, loss, and risk to the point that meaningful discounts would be offered to homeowners.
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