One thing you often come across when looking at home security is that a monitored home security system company says you can get a discount on your homeowners insurance.
This has now been confirmed by a survey of the 10 largest insurance companies carried out on behalf of Electronic Security Association in 2014. They found that the discount could be up to 20% for a monitored alarm system especially when linked with fire, water detectors. Some companies also offer a discount on renters insurance too.
From what I can determine you are unlikely to get the full 20% unless you have no other discounts in place already and you may well get significantly less. The State Farm offers between 5% and 10% depending on the type of system and whether it is for homeowners or renters. Other insurers say they offer discounts on their websites but are less forthcoming on the amount they offer. It will be a case by case basis.
One of the other factors that determine the level of discount is whether it is a monitored or unmonitored/self monitored system. A monitored system is monitored by a third party monitoring center who will contact the owner if there is an emergency and/or contact emergency services depending on the situation.
An unmonitored/self-monitored system can be one that just emits an audible alarm when triggered such as the GE Personal Alarm System or the system can also contact the homeowner’s and other contacts by phone, email or text and some come with the ability to control and monitor the system with your smartphone. It is then up to the person who answers as to what the next step to take is.
The monitored system gets a larger discount and the unmonitored one gets a smaller discount. Some insurance companies won’t offer a discount for unmonitored/self-monitored systems.
Studies on Crime Rates
There are a couple of University Studies that show that security systems do still act as a deterrent to crime and also where the criminal continues the crime there is significantly less taken. This is despite the fact that neighbors often ignore the siren and police can be slow to respond. There is one home burglary every 15 seconds or about 2.8 million burglaries per year. T
The University of North Carolina at Charlotte Department of Criminal Justice & Criminology report showed that if a criminal sees that a home does have a system 60% of them won’t go ahead and will move on.
The Study on Burglar Alarm Effectiveness for Suburban Homes Using Data Gathered from Greenwich, Conn – Dr Simon Hakin, Temple University showed that were a burglary continues on in spite of the alarm system 60% less was taken as the burglar hurried up to get out before being caught or noticed. These studies looked at centrally monitored systems but not at the unmonitored systems – although I’m not sure why the results would be any different but it hasn’t been looked at unfortunately by anyone to see if there is any difference.
So this is why insurance companies are prepared to offer a discount as there is lower cost to them as a burglary is less likely to happen and when they do happen the claim is smaller.
The other area they offer a discount is for smoke alarms and water detectors which can help in preventing and reducing damage from fire and flooding. These can often be added to a home security system
Costs Of Systems
If you have an alarm system or are contemplating installing one it is a good idea to check if there are any savings available from your insurer but don’t expect it to cover the cost of the system and the monthly monitoring fees. It does help but shouldn’t be the reason you buy one type of system over the other. The best monitored system we’ve reviewed is the Simplisafe system where you own the equipment outright and only have to pay monthly for the monitoring so you are not tied into a long contract with penalty clauses if you break it mid-term. It is wireless so it is portable making it a good deal for renters and anyone thinking of moving in the short term so it can be taken with them. The sensors stick to the walls and door/ window frames using double sided tape so there is little damage.
The alternative system which doesn’t give you as much discount and you monitor yourself are the self-monitored systems. They can be reliable and don’t cost as much upfront and they don’t have the same monthly ongoing costs. These systems are normally DIY and wireless (see best DIY wireless security systems here)- so they are portable which makes them great for apartments as well as home owners. You do need to be prepared to install it yourself (this is not too hard and usually takes about 2 hours or so) and you take on the job and risk of monitoring.
The risk is that you or the people added to the contacts miss a notification and you are burgled or there is a fire at your home that a professionally monitored system would have taken action on an reduced or prevented loss.
This side step into monitoring and unmonitored/self-monitored systems is really to point out that the cost of home security needs to be looked at as a whole and not just the fact you may get a discount. A self-monitored system costs are going to cost less and you can get some good home security systems for under $200. But it comes down to what security you want and the risk you are going to take and what you can afford overall.
Renters And Apartment Systems And Discounts
It is good to see company’s giving a discount for home security systems installed in apartments and by renters as according to Korner they are more likely to be targeted by criminals. They are also less likely to have a home security system. So, getting a wireless home security system that is portable (without any penalty clauses) and an insurance discount looks a good idea once you’ve done the sums – that is looked at the costs and benefits.
Often the cost of the insurance is part of your mortgage outgoing so you are going to need to check with the mortgagor what you are paying and whether you get a discount. It might also be worth looking to see if you can separate the insurance from the mortgage as you might get a better price anyway if allowed.
Insurance Discount Summary
To answer the question at the top the answer is yes you can get an insurance discount when you install an alarm system. However, there are some buts to consider.
You are unlikely to get the full 20% quoted by professional home security system companies as that is a maximum and will change depending on your circumstances. A discount at best will go part way to offsetting the cost of monitoring but probably not enough to make a huge difference to the verall or net cost (cost of monthly monitoring less saving on insurance). You need to weigh up the costs and benefits of having a monitored system and then look to see how much of a discount on your homeowners or renters insurance you can get. A self-monitored system is usually cheaper when all costs are included but you don’t get 24/7 coverage by a third party.
Other security features that also will help in reducing your costs of insurance – are living in a gated community, monitored CCTV, fire alarms, smoke alarms and putting dead bolts on your doors.
I guess I don’t need to point this out but just in case. The insurance discount is great to have but it might not make it the best priced insurance to get for your home plus when choosing a policy you do need to ensure it covers you for all the risks you need covering.
Filed under: Buying Advice
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