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Sponsored by: Resideo
Smart Devices Can Result in Homeowners Insurance Savings
Water damage is a major cause of property damage for homeowners and their insurers.
Freezing, leaky and burst pipes, faucets and sprinkler systems drive 29.4% of all property damage claims each year. It’s the second leading cause of property insurance claims behind wind and hail.
Though water damage is a major problem, homeowners fortunately have tools that can help them mitigate the risk. Smart home devices, like leak detection and automatic shut off systems, can help protect homes from spendy, non-weather-related water damage.
Insurers are seeing the benefits of these tools and are beginning to encourage their policy holders to install them, sometimes in the form of incentives, like policy discounts. These new technologies are making homes safer and more efficient, and they’re helping homeowners feel confident their properties are protected.
“Data shows that an individual with smart home solutions – such as water leak sensors, fire alarms, smart thermostats or security cameras – is a more affordable prospect to underwrite,” said Matt Adcock, Director of Business Development at Resideo, a company that provides First Alert and Honeywell Home connected solutions.
What Are Smart Devices?
Matt Adcock, Director of Business Development at Resideo
Many tools get the label “smart” these days. There are smartphones, smart cars, smart fridges and smart washing machines. Smart home devices are tools, like a thermostat, that a homeowner would normally adjust manually — say by turning a dial on the wall — but can now adjust using a device like a phone instead. The smart versions are able to collect data and can help homeowners better track and optimize their water and energy usage.
“These are essential solutions that have been historically very analogue when it comes to controlling and receiving alerts for critical applications in a home, but now these same tools can be enhanced with a Wi-Fi connection so you can control and monitor those same applications from anywhere via an app,” Adcock said.
When it comes to sensors and other tools that connect to your home’s water heater pipes and other systems, smart home devices can detect leaks and issues like burst pipes and help homeowners intercede before too much damage is caused.
These tools have the potential to prevent further or extensive damage and increase a homeowners’ peace of mind, yet few have adopted these newer technologies. “Less than 10% of households have leak detection, but that’s one of the highest frequency perils,” Adcock said. Compare that to a tool like smoke detectors, which are in 99% of U.S. homes, and its clear many property owners could be doing more to protect their assets.
Benefits for Insurers and Insureds Alike
Increased affordability and industry regulations were key drivers for broader adoption of fire alarms starting in the late 1970’s. Governments decided smoke detectors made people safer, so various laws required homeowners, landlords and other property owners to install them.
With smart devices that detect water damage, insurance companies can play a role in encouraging adoption. A 2023 study between Nationwide and Resideo found that property owners with protective First Alert or Honeywell Home devices saw an average claims cost reduction of $4,000.
From 2018 to 2022, one in 60 homeowners filed a non-weather-related water damage claim, and insurance payouts averaged $13,954. Insurance carriers could help incentivize the installation of smart home devices that can mitigate water leaks by potentially offering discounts to homeowners who install these tools. It’s a win-win for homeowners, who can protect their home, often a family’s biggest asset, and insurers, who can prevent or lessen the extent of non-weather water damage claims.
“With the right tools, homeowners can take care of their homes and potentially lower their insurance rates,” Adcock said. “Homeowners can maximize their discount, and their insurance carrier wants to see that because they know a connected customer is likely a safer bet.”
Policyholders in many parts of the country are reeling from rate increases due to increasingly severe weather events, like wildfires and hurricanes, that are damaging homes. Homeowners obviously can’t control the weather, but they can help prevent pipes and other systems in their homes from causing extensive damage with leak detection and automatic valve shut off devices. Property owners can install these tools when they replace or update major appliances, like their water heater, in their home.
“If you’re putting in a new water heater, consider adding some water leak detectors or a water shutoff valve that can automatically stop water at the source of the leak,” Adcock said.
A Smart Home Devices Provider You Can Trust
Resideo has long offered property owners smart home devices that can help protect their properties from water damage.
The company primarily offers solutions for homeowners and small businesses to protect their properties and track their energy usage. These tools can potentially result in savings — both through insurance policies and by helping property owners create more awareness of their resource expenditure.
Adcock compared it to car insurance — when a policyholder shares information about their car and data from tools that track their driving, an insurer can more accurately price the policy. The same is true with homes. If you share high-level data from smart home devices with your insurer, they can more accurately assess and price your risk — and could offer savings as a result.
“The more carriers understand about the profile of a home, the more accurate coverage they can provide,” Adcock said.
Resideo has partnered with Nationwide and USAA so that these carriers can offer policy discounts to their respective policyholders that utilize select First Alert devices and opt to share their device data with their insurers. These tools are a great resource that show insurers that a policyholder is being proactive with their risk management.
“If you include a couple of these smart devices, select insurers will offer policy savings,” Adcock said. “They will provide either a connected home or smart home discount if you install qualified devices like our water leak detection devices.”
To learn more, visit: https://www.resideo.com/us/en/
This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Resideo. The editorial staff of Risk & Insurance had no role in its preparation.
