Insurance for smart homes

Many of us are creating connected homes with sensors, smart thermostats, home hubs and more. But what impact do smart homes have on home insurance?

Many of us are creating connected homes with sensors, smart thermostats, home hubs and more. But what impact do smart homes have on home insurance?

Helen Phipps
Insurance expert
minute read
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Posted 3 MARCH 2020

What is a connected home or smart home?

A connected home or smart home is one that contains a network of gadgets that work together to automate the things you usually do around the house. These devices are part of the ‘internet of things’ (IoT). They communicate with each other via the internet and you can control them from your smartphone, tablet, home hub or another device.

Is there a difference between a smart home and a connected home?

Strictly speaking, they’re not quite the same thing. That’s because smart devices are more complex than connected devices, with operating systems that enable them to do more than one thing. A smartphone, for example, is a smart device, while a window sensor is a connected device.

How does a smart home affect my home insurance?

When you start to build a connected home, there are two things you need to consider:

  • The value of the gadgets you’ve bought (what happens if they’re lost, stolen or damaged?)
  • The effects your gadgets could have on your home (smart devices could help prevent break-ins, and leaks, but they could leave you vulnerable to hackers if the correct safety measures are not followed)

Home insurance policies will contain a single item limit, which is the maximum you can claim for any one item. If one of your gadgets is worth more than this, you may need to increase your limit.

What are the advantages of having a smart home?

Many smart home gadgets are designed to make your home safer and more secure than ever.

For instance, smart home security systems can act as a great deterrent to would-be burglars. If your home does get broken in to, the automated security system may send an alert to your smartphone, capture footage of an intruder and even alert the police directly.

You may also be able to control items from your smartphone while you’re out and about. With smart lightbulbs, you can turn the lights on while you’re on holiday, which can ward off potential thieves. If you’ve accidentally left the oven on, you may be able to simply switch it off from the palm of your hand using your smart phone.

Smart sensors that detect water leaks are also available. They can potentially save you hundreds of pounds in claims costs, if the leak is detected early enough.

What are the potential pitfalls of having a smart home?

The main concern about connected homes is data security. These devices are online, so they could be hacked, compromising your data and privacy. In rare circumstances, they could even be taken over by someone else.

The Government’s National Cyber Security Centre recommends similar security precautions to those you’d use with any online device – setting up a password, keeping your smart gadgets updated and making sure you do a factory reset when it’s time to get rid of your device.

What is the best insurance for smart homes?

Insurance providers are naturally interested in connected homes. At least one UK provider is offering a dedicated package that comes with wireless sensors and a smart home app, and several providers are offering smart home discounts and devices.

It’s possible then, that connected homes will become more central to policies in the future. And just as telematics devices can help cut the cost of car insurance, smart devices might help reduce the price you pay for home insurance.

Home insurance providers ask customers questions about home security, so having good security systems in place could help reduce your premium. Plus, connected home sensors that can spot trouble before it becomes serious could be another way to keep premiums down.

What’s the future of connected homes?

You may be on the way to creating your own smart home. Many people already have connected items in their houses - smart thermostats, smart lightbulbs and smart home security systems, for example.

Right now, smart home technology is still relatively new, but it’s getting increasingly popular. Expect more and more smart appliances to be introduced for the home in future.

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