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High-Tech Security Gadgets That Lower Your Home Insurance Bill

Home security device

Security companies are creating a host of smart-home technologies designed to protect your house from burglars, extreme temperature drops, water leaks and fire.

Cameras operated by your smartphone can help you determine if that visitor at your front door really is delivering a package from UPS. Wi-Fi enabled smoke detectors alert your phone when your fire alarm’s batteries are getting low. And water sensors can detect when your basement is flooding and shut off whatever water source is causing the problem.

And even more good news? These smart-home technologies can earn you discounts on your homeowners insurance policy. The costs of these systems continue to go down as it becomes even simpler to install and use them.

"For years, people have been able to receive discounts on their homeowners insurance by installing a security system," says Brett Jurgens, co-founder and CEO of the wireless home-monitoring company Notion. "However, these systems typically come with high costs, long-term contracts and minimal functionality."

Today's security gadgets have become simpler to use and can monitor even the smallest abnomarlities in your home. Many systems, such as the ones offered by Notion, can can be up and running within five minutes or less and send alerts to homeowners via a mobile app.

How technology can reduce insurance claims

It’s little surprise that insurers want homeowners to invest in smart-home technology. Anything that can save insurers from having to pay claims helps their bottom lines.

According to the Insurance Information Institute, in 2014 only 5.3 percent of insured homes filed a claim with their insurance companies. But of the claims that homeowners did make that year, 97.3 percent were made for property damage, which includes theft.

It makes sense, then, that insurers would want to encourage homeowners to do anything possible to prevent property damage or theft.

"Simple, reliable sensors that are easily deployed and capable of capturing relevant data can lead to a significant prevention of property damage," says Martha Notara, a partner at XL Innovate. "Homeowners benefit by having 24/7 insight into the health of their home and insurers can offer loss reduction initiatives. It's a win-win."

How much you can save by investing in smart-home monitoring or security systems will vary depending on your insurer. Your insurer might offer a discount of, say, 5 percent on your policy if you invest in a smart alarm system that notifies your smartphone of any problems. Or your insurer might not offer any discount at all.

You’ll have to contact your insurance provider to determine if your high-tech home gadget qualifies you for discounts.

The trend, though, seems to be that more insurers will offer discounts for smart-home technologies that can warn homeowners of possible property damage or theft. Accenture in December of 2015 released a study showing that four in 10 insurers said they have piloted or launched a partnership with makers of such connected devices. The survey found, too, that 45 percent of all insurers believe that connected devices will be a driver of revenue growth during the next three years.

Travelers Companies is an example. The insurer recently announced that it now offers discounts to homeowners who invest in smart smoke detectors and security systems that alert consumers through their mobile devices. Homeowners who invest in such devices can qualify for Travelers’ Protective Device discount.

At the same time, researchers predict that homeowners will continue to invest in smart-home technology. A 2015 BI Intelligence report said that the shipments of connected-home devices will grow at a compound annual rate of 67 percent during the next five years. The report said that in 2019, connected-home devices will generate $490 billion in revenue.

What insurance discounts are available to homeowners?

What kind of discounts can homeowners expect when it comes to connected-home technology? State Farm provides a good example. The insurer has partnered with ADT and its ADT Plus home-security system.

The system uses video-monitoring technology to allow homeowners to stay connected with their home no matter where they happen to be. The system alerts homeowners if it detects signs of flooding, unauthorized entry, fire or extreme swings in temperature. Homeowners can also use the system to remotely adjust their thermostat, automate lights and locks, and remotely operate their garage doors.

State Farm has also partnered with Canary, another smart-home security system that allows homeowners to monitor their residences through a smartphone app. Canary provides real-time video of homes and sends instant alerts when activity is detected. Homeowners can also use the service to remotely activate an alarm.

Homeowners who invest in either system might qualify for as much as a 10 percent discount on their homeowners insurance policy.

Homeowners who invest in a Nest Protect connected smoke and carbon monoxide alarm could qualify for a 5 percent discount from their insurer. Nest has partnered with Liberty Mutual and American Family to offer this discount.

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The Nest Protect features a Wi-Fi feature that tells insurers that the smoke alarm’s sensors are working, its batteries are charged and its Wi-Fi connection is on. The alarm also sends phone alerts to homeowners warning them of everything from a low battery to an actual fire. It also tests itself regularly to make sure it is working properly.

Under the discount program with Liberty Mutual and American Family, homeowners can receive a Nest Protect –- which retails for $99 -– at no charge.

American Family has also formed a partnership with connected-doorbell provider Ring. Homeowners who purchase a Ring doorbell can receive a discount of 5 percent on their homeowners insurance.

With the Ring, homeowners can answer their door from anywhere using their mobile devices. This lets them discover who is at their door without having to open it or even be near it. Ring also sends motion-triggered alerts to mobile devices.

In addition to the insurance discount, American Family is offering homeowners a discount of $30 on the $199 purchase price of the Ring Video Doorbell. The insurer will also reimburse the deductibles of homeowners who suffered a break-in after investing in the Ring.

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