Insurance for smart homes
Our homes are increasingly connected, with innovative smart technology that lets us control our domestic devices from afar, monitor our energy use and protect our homes from crime.
But what impact do smart homes have on home insurance? Read our guide to find the right insurance for your connected home.
Our homes are increasingly connected, with innovative smart technology that lets us control our domestic devices from afar, monitor our energy use and protect our homes from crime.
But what impact do smart homes have on home insurance? Read our guide to find the right insurance for your connected home.
What is a connected home or smart home?
A connected home or smart home is one with a network of gadgets that work together to monitor and automate the things you usually do around the house.
There’s lots of ways a home can be smart, depending on the devices you choose. It could mean not having to get up to check who’s at the door, or it could be turning the heating on before you start your commute so you come home to a toasty house.
These smart 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, wherever you are.
Is there a difference between a smart home and a connected home?
Although the terms are often used interchangeably, strictly speaking, they’re not quite the same thing.
- Connected devices are those that connect to the internet, either to transmit data or so that they can be managed remotely.
- Smart devices are more complex than connected devices, with operating systems that enable them to perform multiple functions and interact with other devices. Smart devices don’t just transmit data, they react to data intelligently to make your life easier.
A smartphone, for example, is a smart device, while a window sensor is a connected device.
What devices make up today’s smart home?
Popular smart home devices include:
- Smart home security systems – these may include window and door sensors, motion sensors, connected smoke detectors and security cameras that you can monitor on your smartphone or other device.
- Connected water sensors can be attached to your pipes to alert you quickly to a leak.
- Smart doorbell or door cams let you see who’s at your door before you open it and help you to keep an eye on anyone snooping around your house while you’re away.
- Smart locks – these keyless locks can be opened using your smartphone, your fingerprint or with a keycode.
- Smart thermostats can be controlled from your smartphone so you can turn up the temperature when you’re on the way home and carefully monitor your energy use. Some models learn about your ideal temperature at home and your habits, and react automatically.
- Smart light switches can be programmed to turn off and on while you’re away, to give the impression that you’re at home.
- Smart home hubs and virtual personal assistants allow you to control your devices from a central app. If you have a Google Home or Amazon Echo device, you can also change settings using voice commands.
- Smart plugs can be turned off and on remotely to help save you money on your electric bill. No more worrying about whether you unplugged your hair straighteners before you went out.
It doesn’t stop there. There are lots of smart domestic devices on the market and new innovations in connected home technology every day. From fridges that let you see inside without opening the door, connected pet feeders that let you feed and check in on your pet from afar, and even smart toasters that toast the local weather report onto your breakfast. Basically, if you can imagine it, it’s probably already a thing.
Read our guide to find out which smart devices could add the most value to your home.
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? Are they covered by your home contents insurance?)
- 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 aren’t followed).
Home insurance policies will have 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’ll need to list it separately on your policy.
What are the advantages of having a smart home?
As well as working to make your life that little bit easier, 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 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. Smart 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, for example:
- Setting up a secure password
- Turning on two-step verification if it’s available
- Keeping your smart gadgets updated
- Making sure you do a factory reset when it’s time to get rid of your device.
When creating your smart home, it’s also worth bearing in mind how your home would function in a power cut. For example, if you’re investing in a smart lock, it may be wise to make sure you still have a way of manually unlocking your door in case the power goes out or the smartphone you use to unlock the door runs out of battery.
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 some home insurance 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.
If you have smart tech for your home, or you’re thinking about investing in connected devices, it’s worth speaking to your home insurance provider to see if they can offer you a discount.
Home insurance providers ask customers questions about home security, so having good security systems in place could help reduce your premium, especially if you’ve been a victim of break-ins and theft in the past. Plus, connected home sensors that can spot trouble before it becomes serious could be another way to keep premiums down.
Even if your home insurance provider isn’t quite ready to put their trust in smart tech yet, if connected devices can prevent you from having to make a claim, you’re likely see lower home insurance premiums in future.
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. And as more of us introduce smart tech into our homes, and insurance providers analyse how smart security devices and water leakage sensors impact on claims, we may start to see more home insurance providers offering discounts for connected homes in the future.
Frequently asked questions
Which smart devices could impact on my home insurance?
Smart devices that help protect your home against fire, floods or theft would be the best bet for reducing the costs of your home insurance premium.
What’s best for your household will depend on the risks you face most at home. For example, if you live in an area with high incidences of crime, a home security system – whether it’s smart or not – could help lower your insurance premium. Meanwhile if you live in an older property with rusty pipes, a water sensor that detects leaks could be a very useful addition.
If my smart home security devices malfunction, will I be able to claim on my home insurance?
The outcome will depend on the context and the terms of your policy. There are certain situations where smart technology could malfunction and make your home less secure. For instance, if you have a smart lock on your front door and it incorrectly opens and lets a burglar in, your insurance provider may not agree to pay out for a home contents insurance claim.
In this situation, a claim may be excluded in the same way as if you left your front door unlocked when you went out. It’s worth speaking to your insurance provider if you have any questions about your smart home security system.
Is my smart home vulnerable to hackers?
Anything that’s connected to the internet is potentially vulnerable to hackers. As more homeowners introduce smart technology, it’s likely there’ll be an increase in crime targeting that technology. That’s why it’s important to take the necessary precautions when installing any new smart devices, including setting up secure passwords and installing any updates.
