Will a Home Security System Lower My Insurance Costs?

Home security systems have been one of the most important driving factors in a nationwide decrease in household thefts and burglaries over the last 20 years. A home security system works like a vaccine for your home and property. It can’t prevent all instances of intrusion, but it can decrease your risks and, in the case of a successful break-in, help reduce the cumulative value of your losses. Because of this, insurance companies look favorably upon dwellings with this added layer of protection. By limiting your risks, you thereby reduce the likelihood of your insurance provider having to pay a claim because of burglary. This is usually rewarded as a significant discount on your monthly homeowners insurance premium.

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How much can I save?

It’s important to note that adding an alarm system to your home is not something you should do solely for the insurance discount. These systems are put in place to provide peace of mind and protection for you, your family, and your personal property. An insurance discount is simply an added bonus, but one that can offset your expenses and put more funds in your budget to further secure your home.

Savings will vary depending on where you live, but as an example, in Maine, homeowners insurance premiums average around $800 per year before discounts. A comprehensive home protection system, which includes monitored fire and burglary alarms, can shave up to $160 off the yearly premium. Chances are, you won’t recoup your entire monitoring costs, but your homeowners insurance savings can effectively reduce your financial commitment by $10 per month or more, making around-the-clock monitoring more affordable. Most insurance companies offer discounts of between 5 percent and 20 percent, depending on the type of alarm installed and the protection it provides. The more layers of protection you have, the more discounts you may receive

More than meets the eye

In addition to monthly savings, a security system can save you money in other ways. Most obvious is the cost of replacing personal belongings not covered by your homeowners insurance. Whether you realize it or not, your insurance likely doesn’t cover items of exceptional value. If you don’t have an insurance rider for high-value property, such as antiques, fine arts, expensive technology, and musical instruments, you won’t recoup your losses should these items get stolen or become damaged in a theft or fire incident. An alarm system reduces the likelihood that your home will be broken into, lessening your chances of having to replace these valuables in the first place. Square State Insurance offers more information on effects that are not covered by standard homeowners insurance and the value of policy riders.

Home insurance premiums are determined by many factors. One of these is your personal claims history. As a consumer with a functional and monitored alarm system, you may be eligible for additional discounts for being claim-free. Esurance, for instance, provides a 5-percent rate reduction for clients without previous personal claims. Similarly, living in a neighborhood where the vast majority of homes have alarms puts you at a lower risk of break-ins, which can lower your area’s theft claim quota. A theft claim quota is one gauge providers use to determine rates for a specific neighborhood.

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Reduced response time

Another benefit of a monitored alarm system is that they can decrease emergency services’ response times in case of an emergency. Vivant uses the case of Nevada homeowner Pamela C. as a prime example. In 2011, Pamela’s home was broken into by an armed robber. Her monitored alarm alerted authorities of a problem when she was unable to. This resulted in a faster police presence, which may have saved her life.

More than just law enforcement response, alarms provide homeowners advanced warning if something is amiss. The Electrical Safety Foundation International (ESFI) reports that more than two-thirds of fire-related deaths happen on properties with no or non-functioning fire alarms. This may be due in part to the fact that the majority of home fire deaths take place at night when residents are sleeping and unable to detect temperature changes or smoke. The New York Fire Department notes that most deaths occur between 10 PM and 6 AM.  

In the event of a fire, having a smoke alarm in place can save you from unexpected, and sometimes exorbitant, medical bills. It’s a common belief that homeowners insurance provides coverage for injuries. However, that only applies to guests and visitors. As the homeowner, you are still responsible for your medical care for injuries incurred during a fire or natural disaster.

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Crime is changing

The FBI estimates that a burglary occurs every 18.2 seconds in the United States. While still a concerning number, that’s a significant decrease from as recently as 1994, when there were approximately 6.4 million burglaries, or one of these crimes every 4.9 seconds. By 2011, that number was slashed nearly in half, and today there are approximately 2 million burglaries each year.

There are a multitude of factors that have triggered this reduction in property crimes, with burglar alarms and advanced detection systems leading the way. As more and more homeowners take measures to protect themselves — one in four homes now have a functioning alarm system — criminals have fewer and fewer advantages. By installing an alarm, you not only provide protection for your family, but can help deter crime for your entire neighborhood.

Burglars target homes based on a number of factors, including proximity and ease of access. However, they also forgo properties based on experience and, according to a study by the University of North Carolina Charlotte, only 13 percent of burglars report feeling comfortable going through with their intended crime when a burglar alarm is present.

But not all systems provide the same level of protection. The most effective systems are those that utilize surveillance cameras and motion-activated lighting. When combined with modern deadbolt locks, clean landscaping, and other burglar deterrents, a video-capture home security system is one of the most effective ways to protect your home and family, and reduce your financial losses.

Self-monitored vs. agency-monitored systems

Smart home security devices are a popular option for tech-savvy homeowners and renters alike. These types of systems allow you to control what devices you install and determine the level of protection you want. However, a DIY system may not earn you a discount on your homeowners insurance. Allstate asserts that a system connected to an outside service — one that can dispatch emergency services when the home is unoccupied — is required to enjoy savings. When a fire breaks out or a thief is on site, minutes matter. You may be busy at work and ignore an alarm notification; a monitoring service won’t.

Additionally, with a monitored system, you run less of a chance that a power outage will interrupt your service, since these usually have a battery backup. Smart thieves can easily cut the power to disable a self-monitored system. With that being noted, a self-monitored system still offers benefits, and may be a viable option if your primary objective is viewing your home remotely or capturing video around the clock.

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The bottom line

A home security system can offer you savings by reducing your homeowners insurance premiums and preventing you from having to replace stolen valuables. You’ll also have the peace of mind that your family is safer with home security measures in place, and you can’t put a price on that. Take the time to get to know the available systems in your area, and talk to your insurance provider about other ways you can protect your family and belongings.