How to Properly Insure Your Smart Home

Smart devices cost a lot of money, so make sure they're fully protected.

A lot of homes have smart devices these days. Whether it's light bulbs that operate via an app or alarms that automatically trigger a warning if they sense a dropping temperature, this technology can make life a lot easier. But it can also make adequately insuring the home a challenge.

Fortunately, finding the right coverage isn't as difficult as it sounds. Here are a few things homeowners ought to consider before they go wild with smart technology.

A smart home is still a home

At its core, home insurance is designed to pay for damages to the home due to unforeseen circumstances, up to and including a total loss. The most important thing for all homeowners to do, regardless of whether they use smart devices, is to ensure their policy limits are high enough to cover a full rebuild.

This might not be the same as the purchase price the homeowner originally paid. If housing costs have risen significantly in the area, the home insurance policy limits need to rise, too, or else the homeowner may have to cover the difference if they lose their home in a natural disaster.

Knowing how much to insure a home for isn't always easy. That's part of why few insurance companies enable homeowners to buy a homeowners insurance policy entirely online. Insurance agents work with the homeowner to determine the home's full value and figure out how much protection they need. It's best to accept this help rather than take a guess and risk coming up too short.

Smart devices affect the value of your home

Homeowners pay money to install their smart devices, so they need to factor these costs into their policy limits if they hope to replace these devices following a claim. It's best to bring this up with the insurance agent when deciding on a policy limit if they don't say anything about it directly.

It's also worth noting that some home insurance companies impose limits on electronics, especially portable electronics. This may not affect things like a smart thermostat or smart lights. But those with a Google Home or Amazon Echo device could find they don't have enough coverage to replace this in addition to their smartphones, TVs, and computers under a standard home insurance policy.

In this case, it might be worth adding an endorsement to the policy that allows for extra electronics coverage if this is an option. Again, this is a topic to raise with an insurance agent to figure out the best course of action.

Some insurers offer premium discounts for certain smart devices

Some smart home devices can actually reduce the risk of common insurance claims. For example, a smart fire alarm can automatically notify the authorities of a fire. This fast notification leads to quicker arrival times that can minimize the damage the fire actually causes to the home, so some insurers offer discounts to homeowners who have them.

Other smart devices that can lead to discounts include:

• Smart thermostats
• Automatic fire sprinklers
• Security systems
• Gas and water shutoff sensors

Not all insurers offer discounts for this, and among those that do, each sets its own rules for which devices qualify for a discount and what that discount is. But homeowners who already have or are interested in adding some of these smart devices would do well to shop around and compare home insurance rates from other companies. They may be able to find a better deal this way. Those who don't want to switch companies can also reach out to their current insurer to see if it offers discounts for smart devices.

Ultimately, insuring a smart home brings a few additional considerations, but in the end, it's the same process as insuring a conventional home. The best way to find a great deal is still to take some time to compare a handful of insurance companies.