Are Smart Home Devices Worth the Insurance Discount?
Homeowners insurance discounts for smart devices are usually minimal compared to the overall cost of a policy and the cost of the devices.
You can typically get larger discounts for centrally monitored security systems. When it comes to a home insurance discount, you're often better off installing traditional alarm systems than smart systems.
If you're looking to get a home security system anyway, you should take advantage of any discounts offered by your insurance company. But these deals shouldn't play a major role in choosing one insurance company over another.
Find Cheap Homeowners Insurance Quotes in Your Area
Is a smart home insurance discount worth it?
Most smart home discounts aren't large enough to cover the cost of the hardware and monitoring fees.
Which companies offer smart home discounts?
However, they're worth considering if you're already in the market for a smart home or security system.
You should compare quotes from any companies you're considering to determine whether the savings from installing a smart home system will offset the costs.
If you already have smart home devices, you should check to see if they qualify you for a discount.
How much does a smart device save you on home insurance?
There are three types of smart home insurance discounts that you should look for when comparing insurance companies:
- A discount on your homeowners insurance bill
- A discount on smart home devices themselves, like alarm systems and security cameras
- A discount on professional monitoring services
Devices that lower home insurance rates include:
- Fire and smoke detectors
- Self-monitored alarm systems
- Professionally monitored alarms
- Security cameras
- Video doorbells
- 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 when using a Canary theft-protection system. On the other hand, Hippo offers up to 13% off, depending on the system you choose.
When applied to the average annual home insurance rate , a 5% discount could save you $108 per year, while a 13% discount could save you $281 per year.
Many homeowners insurance companies don't share the exact amount you'll save by installing a smart home device. This is partially because the size of your discount depends on how your insurance company calculates your rates.
Example
If you live in Florida, hurricane risks may make up a large portion of your overall insurance cost. Since a smart home system won't help protect your home against hurricane damage, the discount won't typically apply to that portion of your bill. So your discounts from smart devices will be fairly small.
Additionally, you typically can't qualify for multiple discounts for the same type of home safety device. 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 require a certificate of monitoring to get a security system discount. Most home security companies give you the option to download a monitoring certificate online.
Smart home insurance discounts by company
Allstate
- Save 5% on home insurance with Canary smart home monitoring
- Read Allstate review
Allstate's smart home discount is only worth it if you're already planning to invest in security cameras.
Allstate offers a discount of up to 5% for protecting your home with a Canary Pro smart home security system. In addition, you'll save 30% on a Canary Pro indoor camera. With the 30% savings, a Canary Pro camera would cost $69.
Based on the average cost of Allstate home insurance, you can save around $103 per year on an Allstate policy. That works out to a net savings of $34 if you buy just one Canary Pro camera.
Amica
- Save 20% on Kangaroo home security products
- Discounts on leak detection systems from multiple brands
- Read Amica review
Amica's home security discount is only worth it if you're already planning on getting a security system.
Kangaroo offers Amica customers a 20% discount on home security systems. Kangaroo sells doorbell cameras, indoor and outdoor cameras, motion and entry sensors and water and climate sensors. You'll also get a discount from Amica when you install a Kangaroo security system.
Kangaroo offers a few different plan tiers.
- The basic plan is a free plan that you monitor yourself using the Kangaroo app. The app sends push notifications if it detects movement on a camera or a motion or water sensor is activated.
- The complete plan costs $99 per year. It includes professional monitoring, $1,000 of theft and damage protection per year and coverage for your Kangaroo devices.
Amica also offers discounts for many popular smart home systems, including:
- ADT
- Arlo
- Ring
- SimpliSafe
- Vivint
- Wyze
Amica customers may also get a discount if they have smart thermostats, fire or smoke alarms and electrical fault monitoring.
Amica's leak detection discount could be worth it if you have older plumbing and are concerned about leaks.
However, it depends on which system you choose.
Amica offers discounts on a few different leak detection systems. These systems monitor water flow, pressure and temperature. They automatically shut off the water to your home if there is a catastrophic leak.
Leak detection systems that offer a discount to Amica customers
- Flo by Moen
- Flume
- Guardian by Elexa
- Phyn Plus
- Stream Labs
Amica also offers a home insurance discount when you install one of these leak detection systems. Whether these discounts are worth it depends on the system you choose.
Nationwide
- Nationwide offers a free water leak detection device to customers in 38 states and D.C.
- Read Nationwide review
Nationwide's leak detection discount is worth it because the system is free and you can save up to 10% on your home insurance bill.
Nationwide offers customers free smart water leak detectors. You can put these detectors in bathrooms or under appliances and they will alert you if they get wet. This can help prevent major water damage.
If you take advantage of this program you can save up to 10% on a Nationwide home insurance policy. That could amount to a savings of $275 per year, on average.
There are no monthly recurring fees, so this program is worth it for those concerned about plumbing or appliance leaks.
State Farm
- Free ADT home security hardware, discounted monitoring and a home insurance discount
- Free Ting smart plug and a discount on home insurance
- Read State Farm review
State Farm's ADT discount is only worth it if you were already planning to buy a professionally monitored alarm system.
State Farm customers in 10 states can get a free ADT security system with free installation. The free system includes:
- 1 security panel
- 2 door or window sensors
- 1 smoke detector
- 3-7 water sensors
If you need more hardware, ADT gives State Farm customers a 15% discount on extra devices.
To get the free system, you'll need to sign up for a three-year monitoring contract. Professional 24/7 monitoring from ADT starts at $19.99 per month for State Farm customers. Plans typically start at $42.99 per month, so that's a monthly savings of $23.
In addition, you can save up to 6% on your State Farm home insurance bill when you sign up with ADT. That's an average savings of about $91 per year
However, given that the ADT subscription costs around $240 per year, you're paying more for the subscription than you'll save on home insurance.
State Farm offers homeowners a free Ting smart plug. The plug monitors your home’s electrical network for potential fires from damaged wires, faulty devices or loose connections.
State Farm includes three years of monitoring at no additional cost. Your Ting subscription also comes with repair coordination and a $1,000 hazard repair credit.
State Farm's partnership with Ting is definitely worth it since there's no cost to homeowners.
However, the State Farm Ting program is not available nationwide .
USAA
- Save on an ADT, SimpliSafe, Roost or Resideo system
- Read USAA review
USAA offers its members discounts with multiple home security systems. USAA doesn't provide info on the amount of its connected home discount. This makes it difficult to determine whether its partnerships are a good deal.
The connected home discount from USAA is not available in Hawaii, New York, North Carolina or South Carolina. However, members in these states can still take advantage of discounts on security systems and professional monitoring fees.
USAA's connected home discount is unlikely to cover the cost of an ADT security system and monthly monitoring charges.
However, it's worth it if you were already planning to get a security system from ADT.
USAA members get a 10% discount on ADT's monthly monitoring service and 15% off security hardware. You can also get a free flood and temperature sensor and a $100 ADT Visa reward card if you pay at least $399 in installation fees. To take advantage of these discounts, you must sign a three-year contract with ADT.
Professional monitoring from ADT starts at $28.99 per month, which works out to around $26 per month after the USAA discount. Based on the average cost of home insurance from USAA, you would need to get a discount of around 13% to cover the monthly cost of an ADT plan. That's higher than the typical smart home discount, and doesn't factor in the cost of the ADT system hardware.
USAA's smart home discount might cover the cost of Residio hardware, especially over a period of a few years.
Residio leak detectors and thermostats may be a good deal if you have an older plumbing or heating and air conditioning (HVAC) system in your home.
USAA members get a discount of 22% to 29% on hardware kits from Residio. The kits cost between $200 and $330 after the USAA discount. Residio detectors are self-monitored via an app, so there's no monthly fee.
However, you must choose a kit with leak detectors to get the connected home discount from USAA.
USAA's connected home discount may be worth it for homeowners who choose a Roost security system.
USAA members get a free security system worth $399 from Roost, which includes:
- 1 smart base
- 1 keypad
- 1 motion sensor
- 1 smoke alarm
- 2 water leak temperature sensors
- 3 entry sensors
Professional monitoring from Roost costs $20.99 per month. It's possible that the USAA connected home discount could offset this cost, depending on where you live and the cost of your policy.
It's unlikely that USAA's connected home discount will cover the cost of a SimpliSafe system and the monthly monitoring fee.
However, the program is worth it if you're already considering a monitored alarm system.
USAA members get a 50% to 60% discount on SimpliSafe hardware, depending on which package you choose. The starter kit is the best deal. It costs $170, which is a $259 saving, and includes:
- 1 base station
- 1 keypad
- 2 entry sensors
- 1 motion sensor
- 1 wireless indoor camera
- 1 key fob
SimpliSafe includes two months of professional monitoring for free for USAA customers, after which it costs about $30 per month.
Although USAA doesn't share the amount of its connected home discount, it's unlikely that you would save the $531 needed to offset the cost of the system and monitoring within the first year.
Hippo
- Hippo provides a free smart home system from SimpliSafe or Ring
- Save 10% on home insurance with a self-monitored plan and 13% with a professionally monitored plan
- Hippo isn't currently selling new home insurance policies, but existing customers should be able to take advantage of home security discounts
- Read Hippo review
Hippo partners with SimpliSafe and Ring to provide its customers with smart home monitoring devices. This can include a security camera, entry sensors, water sensors and smoke detectors.
Hippo offers up to 10% savings on your home insurance for self-monitored systems you monitor yourself. A professionally monitored plan from Ring or SimpliSafe can save you up to 13% on your Hippo policy.
A self-monitored plan from SimpliSafe costs around $120 per year and earns Hippo customers a savings of $176 per year. That's a net savings of $56 per year. On the other hand, a professionally monitored system costs about $361 per year and comes with a savings of $229 per year from Hippo.
A professionally monitored Ring system costs $200 per year, which equals a net savings of $29. That means this program is often not worth it if you're only looking to save money.
Other ways to lower your home insurance bill
There are lots of ways for homeowners to lower their insurance costs outside of installing a home security system. You can adjust your coverage, bundle your home and auto policies and consider some home upgrades.
Adjust your home insurance coverage. The coverage limits and types you choose can have a big impact on how much you pay for home insurance. Review your current coverage to make sure you actually need everything you're paying for.
For example, replacement cost coverage for your personal belongings can be very expensive. That's because it pays to replace your damaged belongings with brand-new items. But, if you don't mind buying used or inexpensive furniture, then this coverage may not be worth it.
You can also consider lowering your home insurance deductible. A lower deductible means the insurance company pays you less to fix your home. That's why it typically results in a lower home insurance quote. However, make sure you choose a deductible you can easily pay in an emergency situation.
Bundle your home and car insurance policies with one company. This is typically the largest home insurance discount you can get.
For example, State Farm customers typically save around 24% on their home and auto insurance bill when they buy both policies from the company.
Consider a home renovation project. Insurance companies may lower your rates or give you a discount if you make updates to your home that make it more safe.
For example, replacing an old roof can save you up to 21% on home insurance. That's because a new roof is less likely to have leaks, which can result in costly insurance claims. You can also save by replacing old electrical or plumbing systems.
Insurance companies typically offer discounts for improvements that help protect your home against storm damage, too. This can include things like installing hurricane shutters or grading your yard so water runoff moves away from your home.
Should homeowners with smart devices be worried about data privacy?
Consumers with smart devices in their homes may be in danger of having their data compromised.
This can happen directly from their devices or from insurance companies that collect and store their data.
For instance, a Florida insurance filing for First Community Insurance states that if its customers get a discount for 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." That means homeowners seeking a discount may be sharing sensitive data with their insurance company.
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 homeowners. Insurance companies collecting consumer data are vulnerable to breaches if they don't take measures to tighten 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
How much does a security system save on homeowners insurance?
Home security system discounts vary greatly depending on the company you choose and the type of system you have. For example, Allstate offers a 5% discount to homeowners with a self-monitored Canary security camera. On the other hand, Hippo offers up to 13% off with a professionally monitored plan.
Does State Farm offer a discount for home security systems?
Yes, State Farm offers a home security discount to homeowners who have smoke, fire or burglar alarms or have a home monitoring system.
Some customers are also eligible to receive a free Ting smart plug. The smart plug helps prevent electrical fires and earns you a discount on your homeowners insurance.
Methodology
To find the value of smart home discounts, ValuePenguin sourced discount info and pricing from insurance company websites and their security partners.
Annual home insurance savings are based on the average cost of home insurance across the U.S. To find the average cost of home insurance, ValuePenguin collected quotes from top insurance companies across all 50 states. Your own savings may differ depending on the location of your home, the materials used to build it and your insurance history. Discounts from insurance companies may also fluctuate based on these factors.
When calculating whether a smart home security discount was worth the investment, our expert determined the minimum upfront and monthly service costs of each system and applied any applicable discounts. Systems that ValuePenguin considered worth the investment cost less than the annual home insurance savings. Some values were estimated, as not all companies provide specific data on home security discounts.
Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.