Can ‘Smart’ Homes Cut Insurance Costs?

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  • These days, many Americans are facing rising costs for various aspects of their lives, and that certainly includes most types of insurance coverage they carry. As a consequence, many are now looking for ways to reduce those costs, and some experts say that investing in technology to create a “smart home” might be one very effective way to do so. Of course, this also means that insurance agents may have to take the time to explain to their clients the various ways in which this kind of change might affect their policies, if at all, and help them to better understand what their plans do and do not cover.

    In recent years, a small but growing number of home insurance companies have introduced discounts for policyholders who have what are known as “smart” homes, according to a report from Property Casualty 360. Essentially, what this means is that they’ve installed a number of devices in their houses that can interact with each other in several ways, and may significantly reduce risk of various potential problems.

    “Houses are getting smarter every day, and tech is becoming more interconnected,” Rebecca Galovich, assistant vice president of reinsurance underwriting at Hartford Steam Boiler, told the site. “That enables homeowners to have control over the environment of their homes, adjusting thermostats from outside of the home and controlling security systems.”

    What does this mean?
    For instance, homes can now have systems that work in concert with an owner’s cellphone, work computer, or other devices that will help them spot potential problems, the report said. This can range from something as simple as a “smarter” home security system to sensors that can detect if pipes burst, carbon monoxide begins to build up, or a fire starts, among many other things. These devices can often be installed in just about any room in a home, and therefore significantly reduce an insurer’s risk if an undetected problem is allowed to become too problematic.

    Insurance agents who can adequately help their clients better understand all the ways they can find discounts on their existing policies are typically those who can also keep their retention rates quite high. That’s because consumers tend to enjoy a balance of high-quality customer service and the ability to get the occasional discount on their coverage costs, and striking the right balance between the two is often crucial for agents.

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