How Technology Could Change Home Insurance

by Jon SnyderMarch 21, 2018

Due to the rise of affordable smart products and the Internet of Things (IoT) in the last couple of years, it seems like almost everybody has some sort of smart technology in their home. Although the actual number of users is more like 1 in 6, the conversation about smart homes has turned mainstream.

When it comes to safety, however, don’t expect your Google Home, Amazon Echo, or Apple HomePod to notify you of a damaging situation on its own. But when these devices are connected to other technologies, the possibilities are endless. And so are the potential effects that technology could have on your homeowners’ insurance policy.

Picture this. You’ve just left your house to head to work, and you forgot to turn off the front oven burner after cooking your morning breakfast. There’s a dish towel sitting on the stove that’s just a little too close to the burner, and it catches on fire. Soon your whole kitchen is in flames.

If you have a traditional smoke detector, it will simply make a lot of noise. Hopefully, your neighbor sees something is wrong and calls the fire department.

But if your home was equipped with a smart smoke detector, cameras and fire sprinklers, you could receive a phone or email alert notifying you of smoke in the house as soon as the dish towel started to flame up. You could check then out the issue on your cameras, remotely enable your smart sprinklers, and hopefully, contain the damage. While smart sprinklers aren’t on the market just yet, this type of technology could go a long way in making homes safer … and thereby reducing risk and ultimately how much we pay for insurance. Hypothetically speaking, of course.
technology and home insurance

Technology’s Effect on Homeowners Insurance

The IoT is changing how insurance carriers interact with policyholders, and some are starting to provide relevant insurance incentives. Here are a few ways technology could affect home insurance over the next few years:

  • Streamline the process of submitting a claim. For example, if a burglar triggers a home security alarm and your registered devices disappear off of your Wi-Fi network, insurers could begin the claims process for those items before you even know they’ve been stolen.
  • Lessen risk with early warnings. There are smart detectors for practically everything these days — including mold. Smart air purifiers like Rabbit Air and Air Mega can help prevent bigger issues by detecting a mold problem before it gets out of hand.
  • Decrease the number of claims. By alerting homeowners to accidents and emergencies in real time, smart home devices could help reduce the number of claims filed — which could lead to lower insurance premiums overall for the homeowner.
  • Allow for more personalized coverage. Technology could also help insurers underwrite risks more accurately using the data your devices collect.

Advances in technology not only offer an added sense of security, but they can also help you run your home more efficiently, too. These tech-driven devices could impact home insurance and minimize claims:

  • Security systems: Self-monitored and professionally monitored alarm systems each have their pros and cons. Regardless of which you choose, your home and valuables will be safer with an active security system (and you may even get a discount on your home insurance for having one).
  • Smart water leak detectors: These gadgets attach to your water heater and pipes and alert you of any leaks, whether you’re home or not.
  • Smart deadbolts: Use these to prevent home invasions and theft, as well as enjoy peace mind knowing whether or not you locked your door just by checking your smartphone.
  • Smart smoke and carbon monoxide detectors: These devices can help prevent property damage and keep your family even safer than traditional models.
  • Smart doorbells: This smart home tech helps you control hazards, and some devices even allow you to talk to the person at your door from your smartphone.

technology and home insurance smart systems

Balancing Vulnerabilities and Peace of Mind

It’s important to remember that while technology can help you run a safer home, it’s not something to entirely rely on. Electricity outages due to power surges or storms can disrupt connections and cause missed alerts.

Then there’s the question of cyber-security. Taking proactive steps to ensure your connection’s security is recommended for smart devices. But when installed, and monitored properly, smart devices have the potential to make life simpler and safer in the long run. And by helping to minimize risk and lessen the severity of certain disasters, they could also wind up saving homeowners money on insurance.

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About The Author
Jon Snyder
Jon Snyder is a Product Manager at Esurance, overseeing countrywide design of property insurance products, including Texas. Jon has over 25 years of industry experience in product management, design, and claims roles at Esurance and other major industry carriers.

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