Are insurers deploying the right smart home tech?

From water leak sensors to shutoff valves, cameras and more, the use of smart home devices continues to grow. statesman predicts that there will be 478.2 million smart homes by 2025, up from just over 300 million in 2022. Associated parks reports that 38% of US households owned at least one smart home device in 2022, up 2% from a year earlier. Homeowners are turning to connected devices to streamline everyday tasks and keep an eye on their space. Insurance companies have taken notice, and smart home programs continue to gain popularity among insurers, who can often get devices for free from their insurer by signing up for these programs.

Smart home insurance programs aim to help carriers reduce claims by giving homeowners the technology they need to better control their space and identify issues before they become a costly headache. Take water leaks, for example, which can lead to lengthy repairs, restorations, and insurance claims resulting in thousands of dollars in losses – more on that in a moment. While insurers and homeowners are embracing smart home technology more and more every year, this is a big step forward, are they turning to the right solutions that can really make an impact and lead to the highest possible return on investment (ROI)?

Danger in the foreground

The good news is that more operators are turning to smart home technology in general, which is a step in the right direction. But are they using the right devices to get the most out of it?

Initially, cameras and intruder alarm systems were often the more attractive option for homeowners who had long been taught how to protect their home from intruders. And while this threat is a top priority for many homeowners, they neglect some of the most common and costly risks. According to Insurance Information Institute (III) Approximately one in 525 insured homes is sued each year for property damage due to theft, compared to one in 60 insured homes that sue for property damage caused by water or freezing.


Understandably, what homeowners want or feel most secure in doesn’t always align with the events that affect them the most. With water damage, repair costs are just the beginning. Something as simple as a leaky refrigerator plumbing can lead to weeks or months of repairs, with additional headaches along the way as homeowners leave their home altogether until the situation is fixed. The initial costs associated with cleaning are just the beginning. If that leaky fridge line goes unnoticed for months on end, the homeowner could be forced to rip out the flooring, drywall, subfloor, and more. HomeAdvisor The average water damage recovery cost is estimated to be $3,449 and could rise to $5,702 depending on the severity of the incident.

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When it comes to creating smart home programs that benefit homeowners as well as reduce risks and claims, it is wise for carriers to look at smart home technology that will provide the highest ROI while also pleasing policyholders. Under most smart home programs, carriers offer smart home technology to policyholders, often at no cost or at significant discounts, as well as premium discounts. For telecom operators, the first step to smart home success is placing these devices in customers’ homes. But the work doesn’t end there. Just getting these devices into homes isn’t enough because, as the data above shows, homeowners aren’t focusing on the most devastating risks that can lead to costly insurance claims. It is important that carriers develop smart home programs that educate policyholders throughout the journey to a smart home.

Telecom operators must commit to investing in smart home technology that will monitor and detect the most costly dangers. Often the best solution is to combine multiple devices to create a truly connected environment with multiple risks monitored around the clock. This will not only increase ROI and reduce claims in the coming years, but policyholders will learn what they should be paying attention to and change their behavior for the better. Together, we can use smart home devices to minimize damage, cut costs, and improve the homeowner and customer experience for everyone.

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