Are your smart devices making your home safer? Insurers aren't convinced.

December 23, 2016



They may give you some peace of mind, but is that how they make your insurers feel? It turns out that insurance firms aren’t quite so convinced of the value of your smart home safety gadgets. As per a recent Wall Street Journal report, despite the burgeoning popularity of connected devices like smart security cameras and smoke detectors, insurance agencies aren’t convinced that these homes are also safer. In fact, the Journal reports, “The average cost of insuring a home was expected to rise this year despite the gadgets that pledge to prevent billions of dollars in damage.”


So what’s the issue? Apparently, despite a lot of great marketing, there’s actually little data to suggest that these smart home devices are improving security. But homeowners say that this lack of evidence shouldn’t stop insurance companies from encouraging these proactive measures to make houses safer.


“The insurance companies should provide an incentive,” Tony Bacon, a Chatham, New Jersey resident who has internet-connected security cameras, thermostats, and lights, told the Journal. But despite all the measures he’s taken (and the investments he’s made in technologically securing his home), his insurers aren’t cutting him a break. This is despite the fact that a number of companies offer lower premiums for customers who have “basic security devices.” Somehow, though, the advanced versions of these devices aren’t as convincing.


Regardless, the Internet of Things, particularly when it comes to the home, is clearly on the up and up. Technology research firm ABI Research forecasts around 360 million shipments of smart-home devices in 2020, more than quadruple the number of shipments this year and up nine times from the 40 million shipments logged last year.


And eventually, experts say, this will have an effect on your home insurance premiums. Ultimately, this smart technology “changes the underlying need to have insurance,” Sean O’Neill, a partner at consultant Bain & Co, said. “If you take down severity and frequency of losses, that’s basically what premium dollars support. So the question is, at some point do premium dollars fall significantly?”


As we wait for the data to come in, however, the answer could be years. Potentially up to a decade.

But don’t let that stop you from creating a safer, smarter home. One day, all those connected devices could pay for themselves. You’ll just have to wait.

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