Lower your homeowners insurance by adding a security system

At Homeownering, we’re always looking for ways to help homeowners bring down their costs and add value to their homes. That’s why we love this tip – it does both! In this article, we’ll walk you through the steps to figure out if it makes sense for you, and if it yields any savings, besides peace of mind. Adding a security system in many cases can lower your homeowners insurance.

1. Call your homeowners insurance company

If you don’t have a security system installed already, it’s worth calling your homeowners insurance company and asking how much your premium will go down if you install one. It’s most likely a 15 minute conversation at tops, or at least, it was for me. And, I learned about other types of things I could do to reduce my premium, while we were chatting. 

In my case, adding a security system would result in a $550 reduction in my annual premium. Whoa! That’s a lot of savings.

2. Make sure you find out the specifics

If your homeowners insurance company will give you a reduction, you want to find out what specifically they will reimburse for, and if there are any features that they will reimburse even more for. For example, for my premium to decrease by $550, the system I install has to be “central” or “central and police”. That means that if the alarm is set off by an intruder the alarm will alert to a central location, meaning the security company. If the alert is also to police in addition to the security company, the reduction is the same.

I also asked about cameras – if I have a camera installed in the front of my home instead of a security system, can I get an additional discount? The answer was no. Also, having a camera in addition to the alarm system did not result in any additional savings in my particular case.

3. Shop around

Now that you know how much your company will lower your premium by, it’s time to shop for systems and compare prices. Certainly, the lower the cost is to you, the greater the savings. After comparing prices, the system that satisfied the “central” alerting requirement that would get my premium reduced, that was also the lowest cost for my particular house came in at $27.99/mo with no installation or equipment cost, but I’d need to commit to a 36 month plan. For a year of security, the total came out to $335.88.

4. Calculate your return on investment

After subtracting the yearly amount from my premium, it looked like that system would save me $214.12. Since I had to commit to a 36 month plan, I can calculate the cost over three years, assuming my premium reduction stays at $550 for the following two years. This is what my return looks like:

Not bad. I get a security system for my home and also save money! Now, there are fancier security options that I could have picked. I picked the base level with no warrantee. The warrantee would have added $120 per year. That would have still put me out ahead, but I’d have less savings. I could have gotten a camera that stored several weeks of footage, but that would have added an additional $360 per year to my bill, putting me way over the top.

There are endless options, but the bottom line is: what savings will you get and what system best suits your needs?

And, while you are at it, you might find other ways to reduce your homeowners insurance bill, too! Just ask 😉

(By the way, you might notice that I didn’t mention any names of security companies here. That’s because we don’t advertise any companies and get no money from any third parties so that the information we can provide is as unbiased as possible. I will mention that security companies are very competitive with each other, so definitely shop around and get multiple quotes before deciding on a system.)

Do you want to learn more about how to make your home a financial success and ways to save even more money? Read about our new book: Avoid the Money Trap, Turn Your Home into a Financial Powerhouse. It’s available now in both digital and print copies and takes you through everything you need to know about making your home a financial success in the short and long term, without getting taken advantage of.