Does Home Security Really Reduce Homeowners Insurance Rates?

    What homeowner in America would not be happy to get a reduction in their insurance rates? Homeowners insurance premiums have tracked right along with everything else in our economy: ever upward. Anything that can reduce rates or temporarily slow their climb would be welcome. Does installing home security qualify?

    Home security companies have long suggested that installing things like video cameras and monitored smoke detectors could lead to lower insurance premiums. But then again, we would expect that. They want to sell home security systems. But are such claims true? Apparently, yes.

    From the Horse’s Mouth

    At least one insurance company, Allstate, says right on its website that “you may qualify for homeowners insurance discounts if you install certain safety devices that help protect your loved ones and your property.” They then go on to list some of the safety devices homeowners should consider:

    • Smoke detectors
    • Fire alarms
    • Burglar alarm systems.

    All three are standard fare in the modern home security arena. Even the most basic security systems include burglar protection, smoke, and CO detectors, and at least one or two wireless cameras. A basic system may not qualify for the largest possible discount but beef up that system and you will do better. Allstate suggests that things like deadbolts and fire extinguishers can increase discounts even further.

    Monitored Home Security

    Choosing to install a home security system immediately opens the door to numerous options. At the top of the list is the choice between monitored and unmonitored security. The former involves a monitoring package from a company like Vivint Smart Home. You either purchase or rent security equipment that is remotely monitored twenty-four hours per day, every day of the week.

    An unmonitored system is not connected to a remote monitoring center. Any and all monitoring is done by the homeowner by way of mobile apps connected to video cameras, window and door sensors, and smoke and CO detectors. If that much is not even being done, a security system becomes little more than a noise making machine.

    Vivint says that homeowners are likely to get a larger discount if their home security systems are monitored. That makes complete sense. Monitoring is advantageous in the sense that it guarantees someone is always paying attention even when there is no one at the monitored home. Monitoring facilitates a faster response when emergencies do occur, thereby minimizing losses. Of course, insurance companies would prefer the monitored option.

    Insurance Is About Risk

    If you are still not clear as to why insurance companies offer discounts for home security systems, here is what you need to know: insurance is all about risk. Whenever an insurance company writes a homeowners policy, it takes a risk that it may have to pay out more in claims then it receives in annual premiums. The greater the risk, the more the insurance company stands to lose.

    It is in the insurance company’s best interests to reduce risk as much as possible. One of the best ways to do that is to encourage homeowners to make their properties safer. A safe for property is one less likely to suffer substantial losses in the event of a covered incident. This translates to lower risk and less lost potential for the insurance company.

    It turns out that home security companies have been right all along. It is possible to reduce your homeowner’s insurance rate by installing a home security system. Whether or not the rate reduction is more than the cost of the security system is not clear. That is something you would have to research.