What Happens When Smart Home Tech and Insurance Meet

Maggie Overholt
Maggie Overholt

American Family announced last week that it’s working with Neos, a U.K.-based technology company, to bring something called “smart home insurance” to the U.S. market.

Home insurance being a traditionally slow-to-change industry, AmFam’s move to introduce the internet of things (IoT) into the mix perked our ears up. We were also intrigued by the idea that technology could move the needle of insurance “away from being a payout industry to one that can help prevent claims,” as Neos CEO Matt Poll puts it.

But we were left with the question: What exactly is “smart home insurance,” and how does it work? We got on the horn with AmFam state product director Andy Kearns to find out.

“Think about it this way,” says Kearns: “The more we know about your house and what’s going on around it, the more robust your insurance becomes. It covers you for the exact risks your house is facing in real time.”

Take theft coverage as an example. Kearns points out that theft is covered by homeowners insurance—and as with all perils covered under your policy, the less at-risk your home is for theft, the less you’ll pay for coverage.

How does an insurance company know your house is safer and more secure than someone else’s house? “Previously,” says Kearns, “through geography, government data, and other statistical information.”

But if your insurer can verify that you have a home security system installed to help prevent theft (which is one of the services Neos could provide through American Family), then they can rest assured knowing your home is well-protected. For you, that means lower insurance rates.

With earlier incarnations of Neos smart home insurance in the U.K., the company has also maintained a network of service professionals to help nip potential hazards in the bud before they become claims.

For instance: Imagine you have a smart leak detector in your basement. If a pipe springs a leak, the sensor will pick up on it and send you a notification. Then you can get in touch with your insurer’s certified repair network ASAP to have someone take care of the issue — potentially saving your insurance company a few thousand dollars in claims payouts (not to mention, saving yourself the hassle of having to file a claim in the first place).

Neos foots the bill on these types of emergency repairs for U.K. customers with its top-tier packages (“Better” and “Best” out of Good, Better, Best), covering up to £1,000 ($1,300) per incident. We don’t have word yet on what sort of repair coverage AmFam will provide for its U.S. customers.

All in all, AmFam and Neos’ partnership sounds pretty promising, though the majority of Americans won’t have access to it for a while yet. The company plans to test the waters of smart home insurance in Washington and Arizona starting in late 2019, then slowly roll it out to a wider audience after ironing out the inevitable technological kinks.

“The most important thing is that we add value for our customers,” said Kearns, which for AmFam means building a well-oiled smart system that lets customers interact with their insurance proactively rather than creating a newfangled tech nuisance.

That will hopefully entail a variety of device options, a choice between DIY or professional installation, easy access to service professionals, and other personalized options for bundling your insurance and smart home systems.

For more information about smart home devices and product recommendations, see:
How to Keep Your Smart Home Secure
The Best DIY Home Security Systems
The Best Smart Smoke and CO Detectors
The Best Video Doorbells

About the Authors

Maggie Overholt

Maggie Overholt Contributor

Maggie is a former lead insurance editor at Reviews.com. She's written more than 70 insurance articles covering homeowners, auto, life, motorcycle, travel, and more.