A popular trend and topic of conversation in the US is smart homes with smart security features. There are around 47 million smart homes in the US, and the industry is expected to touch a revenue of around $46 billion by 2025. The penetration is set to increase and be around 52.4% this year. Among the drivers of this surging adoption are the cases of porch pirates and theft across communities.

But do residents of smart homes benefit from them or are they prone to more risks? And what are the insurance implications? Let’s take a look.

Benefits of smart security to homeowners

• Remote monitoring

Smart security in smart homes offers remote monitoring options, which can be ideal for people who are often away from home. Homeowners can check their homes via mobile applications or over the internet. With real-time check-ins and monitoring, it becomes easy for homeowners to keep a check on their property. If there’s any theft or attempted burglary, homeowners can get notifications and alerts that can help them seek police help to save their property and save them from any financial difficulties.

• Increased security with smart applications

Smart security can benefit homeowners by enabling automatic shut-offs through the installation of smart stoves and grill guards. This helps prevent damage to the property when no one is around by tracking leaks, fires, and other incidents. Furthermore, sensors and alarms can be installed to keep an eye out for any gas leak, helping homeowners become aware of potential dangers before they happen.

• Cloud video recording and motion sensors

One of the best things about smart homes is that they can have video recordings on the cloud that can be used in the event of a police complaint or for an insurance claim.

Also, motion-activated detectors and cameras can be installed at every doorway in smart homes. The real-time feed that these security cameras can provide allows homeowners to see if there is any movement at the door.

• Insurance help

Smart security can help homeowners a lot because it might make their insurance a little bit more affordable. A home can become an asset, and the homeowner can reduce the premiums because of the high level of security provided by the correct security measures. Any homeowner’s insurance policy is a liability for an insurance agent, and smart homes can provide enough safety, which can reduce insurance costs to some extent.

What are the risks involved?

• Privacy concerns

One of the main problems that citizens encounter in the digital age is identity theft. An FTC report from 2023 states that there were approximately 93,735 fraud reports filed under identity theft, totaling approximately $477 million in monetary losses. Because of its extreme seriousness, the scam is now the biggest risk brought on by smart home security. Hackers can target service providers’ databases and take advantage of all sensitive data, including credit card numbers, which are the most common means of identity theft.

• Data security

One of the main concerns with smart homes is data security. Video cameras and smart security devices allow for the misuse of information. For instance, it will be simple for an attacker to get access to a home network, alter the video, and take personal data. This is because data sent by smart home devices is frequently not encrypted.

• False alarms and errors

Errors in the third-party applications that are used for tracking or monitoring can also be a risk for homeowners. All apps are somewhat vulnerable to hacking, and hackers could easily obtain and misuse all of the data they get access to. This may result in a genuine security breach and panic when someone else starts operating the smart security devices instead of the homeowner. Furthermore, false alarms can be extremely unsettling for homeowners.

For homeowners, these smart security tools and apps are becoming more and more crucial. However, we must not overlook their potential cost. Homeowners can find it hard to install high-level security systems, and if they do, they need to face numerous risks when it comes to cyberattacks and data breaches.

Smart homes and related insurance implications

Insurance companies tend to look positively at smart homes equipped with security systems. As a result, these homeowners often qualify for insurance premium discounts. Smart homes may be impacted by additional insurance-related issues too, though. Let’s take a look at them.

• Proof at the time of claims

The ability of smart homes with security systems to produce evidence at the time of claims facilitates the expediting of the process. Smart security devices use cloud systems to record and store all of their video footage. This gives homeowners easy access to stills and raw video if an insurance claim is filed.

Thus, obtaining the right video recording can lead to the filing of claims in the event of theft or attempted burglary resulting in property damage. For homeowners, getting clips with timestamps can be useful. Automatic data sharing is also possible with integrated software, which lowers the possibility of fraud.

• Insurance to cover smart devices

Smart devices and homes are vulnerable to various risks, such as cyberattacks, as was previously discussed. These are also expensive pieces of hardware and are vulnerable to theft and pilferage too. It is critical to invest in quality cyber insurance if homeowners want to ensure complete safety and prevent financial or legal complications from data breaches. It is simple to pay for legal proceedings or get money back that has been lost with this kind of coverage.

The costly smart systems also require defenses against theft or damage. Therefore, investing in a comprehensive insurance policy for smart home devices or electronic items may be the best course of action. These insurance plans pay for any damage and the cost of replacing or repairing smart system components.

Do you own a smart home and want to insure it? Gonzalez Insurance can help!