Are Smart Home Devices Worth the Insurance Discount?
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Smart home devices are becoming a common fixture in homes across the country. But smart devices aren't just for turning off lights and making playlists. In combination with a home insurance policy, they can also save homeowners some cash while increasing home safety. However, smart device discounts are usually minimal compared to the overall cost of home insurance.
Perhaps more importantly, homeowners can get larger discounts for centrally monitored security systems, meaning you are often better off installing traditional centralized alarm systems than purchasing smart devices.
If you're looking to purchase a qualifying smart device anyway, you should take advantage of the discount, but these deals shouldn't play a major role in selecting one insurance policy over another.
Smart home insurance discounts
There are three types of smart home insurance discounts that shoppers should look for when comparing insurance companies:
- A discount on your homeowners insurance premium
- A discount on smart home devices themselves, like alarm systems and security cameras
- A discount on professional monitoring services
Is a smart home insurance discount worth it?
We recommend comparing home insurance quotes from any companies that you're considering to determine whether the savings from installing a smart home system will offset the costs. However, some programs are more likely to pay off than others.
Although some programs are not worth the investment if you're simply looking to save money on homeowners insurance, they are still worth considering if you're in the market for a smart home or security system for other reasons.
Homeowners who already have smart home devices should check to see if they qualify for a discount based on their current system.
Company | Program | Worth it? |
|---|---|---|
| Allstate | Canary security cameras | Yes |
| American Family | Hedge smart home system or ADT professionally monitored system | Hedge is worth it, ADT is not |
| Amica | Smart water shutoff and monitoring | Maybe, if you own an older home |
| Hippo | SimpliSafe, Kangaroo and Notion smart security systems | No |
| Liberty Mutual | Vivint smart home security | No |
| Nationwide | Notion smart home security system | Yes |
| State Farm | Ting smart electrical plug | Yes |
| USAA | ADT Blue self-monitored alarm system, ADT professionally monitored system and SimpliSafe | No |
How much does a smart device save you on home insurance?
Devices that reduce home insurance rates include:
- Fire and smoke detectors
- Self-monitored alarm systems
- Professionally monitored alarm systems
- Security cameras and video doorbells
- Electronic water or gas shutoff systems
- Indoor sprinkler systems
Homeowners insurance discounts for smart home devices range from one company to the next. Allstate offers customers up to a 5% discount on their premium when using a Canary theft-protection system, while Hippo offers up to 13% off, depending on the type of system you choose.
When applied to the average annual home insurance rate ($1,680), a 5% discount will save you $84 per year, while a 13% discount will save you $218 per year.
Many homeowners insurance companies don't publicize the exact amount you'll save by purchasing a smart home device. This is partially because the size of your discount is dependent on how risks are weighted for your individual home. If you live in Florida and nonhurricane risks represent a small share of your overall premium, your discounts from smart devices will be fairly small.
Shoppers should also note that discounts often won't combine because of overlapping functionality. For example, if your home has a centralized fire alarm, you won't get a bigger discount for having a smart smoke detector, too.
How do I get a smart home discount?
Some insurance companies will require you to provide a certificate of monitoring to receive a home insurance discount. Companies like Ring and SimpliSafe give customers the option to download a monitoring certificate online or via their app.
Liberty Mutual offers to double your smart home discount if you allow the company to verify your home monitoring system by communicating with your provider and occasionally receiving data on your system.
Smart home insurance discounts by company
In the hopes of increasing customer safety and lowering the risk that policyholders will make claims, these insurers are offering discounts and deals on devices that help maintain a safer home:
Allstate
- Save 5% on home insurance with Canary smart home monitoring.
- Worth it if you're planning to invest in security cameras.
- Read Allstate review
Allstate offers a 5% home insurance discount for protecting your home with a Canary smart home security system. In addition, you'll receive a $20 discount on an annual Canary premium service plan, a camera-based system that includes motion-activated recording, person direction, one-touch access to first responders and more. The Canary premium plan starts at $99 per year for one device.
With the $20 savings, a Canary premium service plan would cost $79 per year for a single device. Based on the average home insurance premium, homeowners can save $84 per year on an Allstate policy. At a $5-per-year net savings for the base package, this program is worth it if you're planning to invest in security cameras.
American Family Insurance
- Earn a discount for installing a Hedge smart security system or ADT traditional home security system.
- The self-monitored Hedge system is worth the investment, but ADT's monthly fees are too expensive to be offset by a
- home insurance discount.
- Read AmFam review
American Family (AmFam) offers a few ways to save with its Safe, Secure, Smart Home Discount:
- Hedge is American Family's proprietary self-monitored system, which includes indoor security cameras, leak detectors and motion sensors. Device packages range from $75 to $110, and there is no monthly fee.
- ADT offers AmFam customers a monthly discount on its traditional home security system, along with free installation with a 36-month contract.
AmFam does not list the amount you'll save with its Safe, Secure, Smart Home Discount. However, the Hedge system does not have a monthly fee, and based on the cost of its equipment packages, you will probably save enough on your homeowners insurance within the first two years to make this investment worth it.
The ADT monitoring system discounts are probably not worth the investment. Basic monitoring packages with ADT start around $336 per year, and homeowners are required to sign a 36-month contract that includes early termination fees. Even without knowing how much you'll save, it's not likely you'll earn a large enough discount on your home insurance to cover the cost of this system.
Amica
- Save 20% on a Flo by Moen smart water shutoff system, plus a discount on home insurance.
- Could be worth it if you have older plumbing and are concerned about leaks.
- Read Amica review
Amica Mutual offers homeowners a 20% discount on Flo by Moen whole home protection systems, which monitor water flow, pressure and temperature and automatically shut off the water to your home in the event of a catastrophic leak. Flo by Moen systems start at $499. Amica also offers a home insurance discount when the system is installed.
Because the systems are so expensive, homeowners aren't likely to recoup the cost of a Flo by Moen water shutoff valve with the discount Amica provides on your home insurance rate, which varies by state. However, this system could be worth it if you live in a home with older plumbing, as it has the potential to save you a lot of money by preventing significant water damage.
Hippo
- Save 10%-13% on home insurance with SimpliSafe, Kangaroo or Notion smart home systems.
- Self-monitored plans may be worth it if you're already planning to purchase a system, but professionally monitored plans don't offer enough savings to cover costs.
- Read Hippo review
Hippo is partnered with multiple smart home monitoring systems, including SimpliSafe, Kangaroo and Notion. The company offers up to 10% savings on your annual premium for self-monitored systems and up to 13% savings when you purchase a professionally monitored system from SimpliSafe.
A self-monitored plan from SimpliSafe costs around $120 per year and earns Hippo customers a savings of $168 per year. While the cost of the plan is less than the discount, it doesn't include security system hardware, sensors or cameras. Equipment packages with SimpliSafe start around $170.
On the other hand, a professionally monitored system costs about $340 per year and comes with a savings from Hippo of $218 per year, which means this program is not worth it if you're only looking to save money.
Liberty Mutual
- Save $100 on Vivint home monitoring systems, plus a discount on home insurance.
- Regardless of the amount of the home insurance discount, it won't be enough to cover the $600 in Vivint equipment required to earn the equipment discount.
- Read Liberty Mutual review
Liberty Mutual customers can save $100 on select Vivint home monitoring devices. The company also offers a verified smart home discount, which it states will double your home monitoring system discount. In return, customers must allow Liberty Mutual to verify their home monitoring system with the provider and periodically receive data on the system.
Liberty Mutual doesn't share the amount of its smart home discount. However, given that homeowners have to purchase a minimum of $600 in equipment from Vivint, along with professional installation and a service agreement, this program is probably not worth it.
Nationwide
- Save 50% on the price of a Notion smart home monitoring kit and $50 per year on home insurance.
- Worth it for homeowners in the market for a self-monitored security system.
- Read Nationwide review
Nationwide has partnered with the Notion Smart Home Monitoring System to provide homeowners with nearly 50% off of the price of a Notion kit and an average savings of $50 per year on their home insurance. Notion sensors monitor water leaks, temperature changes, smoke and carbon monoxide alarms, and the opening and closing of doors and windows, and kits start at $75 for Nationwide customers.
The Notion system is self-monitored, so there are no monthly recurring fees. Homeowners that save $50 per year on insurance can expect to recoup the cost of Notion hardware in one to two years, making this program worth it for those in the market for a DIY security system.
This program is currently only available in 12 states and Washington, D.C.
State Farm
- Free Ting smart plug with three years of free monitoring and a discount on home insurance.
- Worth it because there is no cost to participate.
- Read State Farm review
State Farm offers homeowners a free Ting smart plug, which monitors your home’s electrical network for damaged wires, faulty devices or loose connections that can lead to fires, along with three years of monitoring at no additional cost. Your Ting subscription also includes repair coordination and a $1,000 hazard repair credit. Installing a Ting device may also qualify you for an additional home insurance discount.
State Farm's program is definitely worth it since there's no cost to homeowners and it could result in a discount.
The State Farm Ting program is not available nationwide .
USAA
- Save 15% on a SimpliSafe system, 12%-15% on ADT Blue and 10% on a traditional ADT system, along with a home insurance discount.
- The SimpliSafe system may be worth it if you are already in the market for a self-monitored system. ADT's costs are too high to be offset by a homeowners insurance security discount.
- Read USAA review
USAA offers its members a discount with multiple home security systems, including:
- SimpliSafe, which gives USAA members up to 15% off any new, no-contract security system.
- ADT Blue smart security systems, which includes a 12% discount on hardware for self-monitored systems and 15% off with a three-year contract for professional monitoring.
- ADT traditional security, which includes a 50% discount on installation and a 10% discount on monitoring, plus a $100 prepaid card.
USAA doesn't provide information on the amount of its smart home discount, which makes it difficult to determine whether its partnerships provide a good deal. The most basic SimpliSafe system costs around $170 for hardware, which would result in a savings of $26 for USAA members.
USAA members who choose the ADT Blue self-monitored starter system can save $26 off of the cost of the system, which is about $220. Those who decide to pay $20 per month for professional monitoring with ADT Blue can expect a savings of $36 per year.
The ADT traditional security system costs even more, with monitoring packages that start around $336 per year. Even without knowing how much you'll save, it's not likely you'll save $300 a year on your home insurance with this system. Therefore, this program is not worth it.
Should homeowners with smart devices be worried about data privacy?
The prevalence of smart devices in the home has raised concerns about data privacy and the extent to which the devices may be recording a homeowner's private information, known or unbeknownst to them. Consumers who have smart devices in their residence may be vulnerable to their data being compromised, both directly from their devices and from insurance companies that collect and store their data.
For instance, a Florida insurance filing for First Community Insurance states that if its customers receive a discount for a home telematics advice, they "consent to the release of all data and/or information produced, monitored, obtained and/or captured by such device(s), by the devices’ third-party provider to the insurance company." Unwittingly, homeowners seeking a discount may be sharing sensitive data with their insurer.
Are consumers with smart devices compromising their data security? Asaf Ashkenazi, chief strategy officer at Verimatrix, a technology security solutions firm, believes so.
"The security of most of these consumer devices varies from no security at all to basic security," says Ashkenazi. The lack of security makes the devices "easy targets for hackers who can obtain live video streams and other private data."
Of course, hackers don't have to target individual consumers. Insurance companies hoarding consumer data are vulnerable to breaches if they don't take measures to tighten information security protocols. "It is almost certain that such insurance companies' databases are a target for hackers," warns Ashkenazi. "There are many cases where companies responsible for handling this data don't do enough to protect it, leading to massive leaks."
Frequently asked questions
Do security cameras reduce insurance costs?
Self-monitored security camera systems can lower your home insurance costs, although the discount depends on the company. Allstate offers a discount of up to 5% to homeowners who install the Canary camera system, while Hippo offers up to 10% off for those who have a SimpliSafe, Kangaroo or Notion self-monitored system. Nationwide customers with a Notion system save an average of $50 per year.
How do I get a SimpliSafe certificate?
SimpliSafe customers can download a monitoring certificate through the SimpliSafe website. Once you log in, navigate to the monitoring page and click "download certificate," located below the monitoring certificate header.
Does State Farm give a discount for a home security system?
Yes, State Farm offers a home security discount to homeowners who have installed smoke, fire or burglar alarms or have a home monitoring system installed. Some policyholders are also eligible to receive a free Ting smart plug, which helps prevent electrical fires and earns you a discount on your homeowners insurance.
Methodology
To determine the value of smart home discounts, discount information and pricing were sourced from the websites of the insurers we reviewed and their security partners.
Annual home insurance savings are based on the average annual rate across the nation — $1,680. Your own savings may differ depending on the location of your home, the materials used to build it and your insurance history. Discounts from insurers may also fluctuate based on these factors.
When calculating whether a smart home security discount was worth the investment, we determined the minimum upfront and monthly service costs of each system and applied any applicable discounts. Systems that were deemed worth the investment cost less than the annual home insurance savings over a two-year period. Some values were estimated, as not all insurers provide specific data on home security discounts.