Got Nest? Some insurance companies reward smart-home device owners

Many early adopters of smart-home gadgets were in it to save money on heating and electricity bills, but now theres a newbonus to smartening up your home: insurance breaks.

In 2013, State Farm paired up with ADT and Lowes. First, State Farm customers could get discounts on connected home-monitoring equipment from those brands, including smoke detectors and thermostats, which in turn could lead to 10 to 15 percent reduction on their home or renters insurance. Right now, State Farm is one of the few insurance companies offering such a discount, but as the smart device market grows mainstream adoption is expected by 2019 the practice could become more widespread.

Smart thermostats and security systems are expected to be among the most commonconnected home devices in the next five years; people are generally concerned with saving on their heating and cooling bills and keeping their homes safe. But something like Nest coupledwith Dropcam, August smart locks, and other Works With Nest devices is exactly what insurance companies like to see in their customers homes.

If somebody has some sort of temperature-monitoring system in their house, we give them a discount for that.

If somebody has some sort of temperature-monitoring system in their house, we give them a discount for that, says Tim Arone, VP of Risk Management at Pure Insurance. The company specializes in high-net-worth homes, and Arones clients are becoming more and more interested in smart-home technology. While these types of systems used to be out of reach for less-wealthy homeowners, thats starting to change. The price point of all this technology is coming down, because its becoming more and more mainstream, he says.

The price of exterior security cameras and window and door sensors is also dropping; Piperis a do-it-yourself home security kit that costs $239, with nomonthly fees. Meanwhile, Sengleds Snapdisguises its surveillance features (camera, microphone, and sensors) inside a long-lasting LED light bulb; which makes them less likely for burglars to spot and disable.

A smart thermostat can help prevent pipes from freezing, while products like Utilitechs smart-leak detectorcan shut off the water if it detects moisture. It makes sense that insurance companies such as Pure would be big fans of technology that helps homeowners prevent and minimize damage. The same appeal is there for owners themselves, especially when paired with the potential for lower energy bills. There are other potential benefits, too. When I sell my house, says Arone, this could make it a little more valuable, what distinguishes my house versus my neighbors house.

Of course, not everyone wants a smart home. The idea of someone being able to hack your thermostat concerns a lot of people, Arone admits. Yet the threat isnt dissuading him from speculating about smart-home gadgets role in the future of insurance. We could see installation of intelligent devices, such as the Nest product or any other product, almost being considered alongside installing storm shutters on a house in Florida when calculating premiums, he says. Though hes seen interest in smart thermostats and water-leak detectors from clients across the country, insurance companies that start offering similar discounts may start small, keeping the incentives to areas of the U.S. most prone to floods and freezing pipes.

Besidesconcerns about hacking, some consumers fear how insurance companies could use the data they collect. While Arone admits companies could award discounts based on how often a home is occupied or the average humidity in the house, he doesnt foresee companies using the information against homeowners. Like the devices installed in many cars that auto insurance companies use to reward safe driving, the smart-home data would be used as an incentive, not a disincentive, he says.

Related:Imagining the smart home with a TV as its hub

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Got Nest? Some insurance companies reward smart-home device owners