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Home Alarm Systems: Family Security, Insurance Savings and More

Home insurance carriers offer homeowners a lot of ways to save money on their home insurance premiums. Yet, many policyholders are unaware of these fantastic savings opportunities. For example, many insurance companies provide cheaper home insurance rates when living in areas with less natural disasters or having a home that can withstand a natural disaster. Homeowners can also save between 5 and 20 percent on their premiums by making changes to their homes that increase safety and security, such as installing new house wiring, protective roofing materials, natural gas and water leak detectors and burglary and emergency event alarm systems.

Alarm Systems Are a Sound Investment

When your insurance agent calculates the premiums for your home insurance, he/she must look at the overall risk associated with your specific home environment based on a variety of factors, including the home's design, age and geographic location. An older home with bad wiring or roof shingles, for example, is a fire and water leak hazard. An older or defective gas furnace or water heater can pose the same risks if a breakdown occurs. In these instances, your insurance carrier charges you higher premiums to help offset the potential costs of covering the repair or replacement of structures and other property after an emergency event. Most carriers also charge higher premiums if your home is in a neighborhood that has high annual crime statistics.

The value of a home alarm system is obvious: An alarm system detects emergency events as they happen. As a result, an alarm system increases your ability to stop an event before it causes any damage. If damage occurs and you do need to file a claim, the alarm system can reduce the chance of a high dollar amount claim by usually alerting emergency personnel of an event before it causes too much damage. If the insurance company estimates that it will not have to pay out a lot of money to you, then it can offer you savings in the form of what is typically referred to as a "safe home discount." Even if you install a very basic alarm system that sends you remote app alerts instead of sending alerts to a professional monitoring company, many insurance companies will look at your system as a tool that reduces risk by creating a safer and more secure home environment.

Types of Home Alarm Systems

With so many alarm system products on the market, it can be difficult for a homeowner to know which system to pick to both protect the home and earn the highest insurance savings. You should always contact your insurance agent to find out if your insurance carrier offers an alarm system discount and determine the amount of the discount and the type of alarm system that the insurance company recommends to homeowners.

Although there are many alarm companies, you should consider, after your insurance agent's recommendation, your budget and the type of system that you believe will best fit your home and lifestyle. You will normally get the highest discount for an alarm system that offers as much detection as possible, including smoke and fire, water and flooding, gas and carbon monoxide leak, electrical power surge and burglary detection. An alarm system with an attached sprinkler system and third-party monitoring alert can result in a higher discount. The type of monitoring system also affects the discount:

  • Basic Non-Monitoring System
    The most basic of basic systems does not send any type of alert to anyone. Instead, an audible alarm goes off within the home the moment the system's sensors detect an event. A basic non-monitoring system is great for homeowners that have tight budgets, but it is useless if you are away from your home when the event takes place.
     
  • Non-Professional Monitoring System
    This system, as described above, alerts you and only you when an event takes place. Depending on the system design, you can receive an email or app notification on your phone or laptop. The downside to this type of system is that you fail to receive the notification if you do not have access to a phone or computer. This system also fails you if you do not have cellular service or online connectivity during the event.
     
  • Professional Monitoring System
    Obviously, the best type of system is one that alerts a third party of an event so that emergency personnel can still be dispatched to you home when you are not around or you are unable to receive an alarm notification. The system sends both you and your alarm company's monitoring center the alert and then the monitoring company takes actions to stop the event and protect your property and anyone who might be inside of your home. For example, an alarm system might detect the faintest trace of smoke right before an electrical outlet starts to burn. The professionals at the monitoring center call your local fire department and emergency personnel stop the event before it becomes a fire that spreads beyond the wall socket. If your home is burglarized, personnel at the alarm company's monitoring center can contact the police and alert you to the situation. They can also warn you before you walk into danger.

With the non-professional and professional monitoring, you can also find equipment and alarm companies that offer homeowners the ability to control a variety of home systems from a remote location, including appliances, electricity, lighting, thermostats and sprinklers. Although smart home automation can cost more upfront than non-automated alarm systems, many insurance carriers give larger discounts to homeowners that have greater control over their homes and emergency situations. If you have the ability to turn off a stove that you forgot to turn off before you left your home, your remote access makes your home a safer place. Additionally, automated options combined with interior and exterior cameras allow you to view events as they take place so that you can share more details and/or the video feed with emergency personnel to forewarn them before they enter an unknown emergency event. You can also see if you can stop the event from your end. For example, you might use remote access to shut off electricity to a room where a power surge damaged wiring or where a socket attached to a powered on appliance has started to burn.

Connecting to a Professional

Some systems are considered better than others based on how fast they can alert you and/or a monitoring center about an emergency event. Again, your insurance company might consider a variety of factors when determining the discount for an alarm system, including how quickly your system passes on emergency alert notifications. Connectivity options include landline phone, broadband, cable and wireless. The best alarm system to invest in offers multiple connection methods to prevent thieves from preventing the alarm from sending an alert if they cut phone and/or cable lines. The best system also has some sort of battery backup in place to guarantee connectivity even if the main power goes down or a burglar somehow shuts off the electricity.

Home Renter's Insurance Savings

You might wonder if you can save money because of an alarm system that the landlord previously installed in your rental home. You might also wonder if installing your own system might result in a discount. As with homeowners insurance, you should always check with your insurance agent. Some insurance companies do pass alarm system savings on to renters. The person who installed the system rarely matters. Also, you might be able to get a discount even if your system is nothing more than basic window and door sensors attached to a loud interior alarm. Of course, you may typically find that the better the alarm system, the higher the discount.

The Importance of Maintenance

To keep your alarm system discount, you must make sure that the system is regularly maintained. Maintenance is also important for another reason: If your home is burglarized or an emergency event takes place, the insurance company might deny your claim if the insurance investigator finds that you did not keep the alarm system on file up-to-date and in good working order.

Energy Savings Discount

Another way in which an alarm system can help you save money on home insurance is through energy savings. Many alarm systems tie into smart house energy savings systems, and a lot of insurance companies provide an additional discount to homeowners that have "green" systems in place. The reason for the discount is that an energy conservation focused homeowner is less likely to have an emergency event than one without green systems:

  • A homeowner with an energy-efficient home is less likely to use dangerous heating equipment, such as space heaters and fireplaces.
     
  • A green homeowner typically has up-to-date wiring in the home, which lowers electrical fire risks.
     
  • A homeowner with an automated smart home alarm is more likely to have automatic shutoff systems in place for parts of the home that use too much energy and can cause emergencies. For example, a smart home alarm might be tied into a system that automatically shuts off power to electrical sockets when you are away from your home.

Things to Keep in Mind

It is important to never install any type of alarm before you have asked your insurance agent for alarm system recommendations. Many homeowners have installed alarm systems only to find out afterward that their insurance carriers did not cover particular brands and/or systems. It is also important to remember that any initial costs for an alarm are usually worth it in the long run when compared to non-discounted insurance premium rates and the financial and emotional costs related to losses that happen when emergency events go undetected. The Bureau of Justice Statistics found during its last National Crime Victimization Survey that 7.99 percent of 129,492,740 households experienced property-related victimizations, such as burglary, property theft and motor vehicle theft, in 2014. There were an average of 23.1 burglaries per every 1,000 households and 100.5 property thefts per 1,000 households. According to the U.S. Fire Administration, a 2013 study revealed that the main causes of fires that resulted in property damage, injury and death in the home were primarily preventable events related to smoking, dryers, electrical or equipment malfunctions, stove and grill cooking, open flames, heating sources and holiday activities. A home alarm system can help detect many criminal and noncriminal events as they happen and prevent overwhelming frustration, anger and grief and often life-altering financial losses.

Lastly, remember to shop around when looking for home alarm system insurance policy discounts. Your current insurance carrier might not offer as high of a discount based on your specific situation as one or more competitor companies that want your business. Add your current discounts, including any type of loyalty and/or multiple product or policy discounts to the estimated alarm system discount and then compare that total to the discounts offered by other insurance companies in your area. If you want to stay with your current insurance carrier, take the estimates you have received from other insurance companies back to your insurance agent and try to negotiate new rates.