That's hot! Home Insurance Technology Trends

If you want to insure a mansion or a priceless art collection, don't be surprised if a certified thermographer shows up at the door, infrared camera in hand.

Thermal imaging cameras are among the latest high-tech tools home insurers are using to help stem losses, and more gadgetry could be in the works. The various solutions are designed to assess risks and detect problems before they become catastrophes, saving customers from heartbreak and companies from paying out millions in damage claims.

Fireman's Fund Insurance Co., which does inspections of most of the homes it insures, started using thermal imaging cameras in the last year for the highest-value homes and historic buildings the company insures. The service is also available to people with high-value art collections, with scans being performed on storage and display areas. Use of the tool may expand.

"For us it's in the infant stages, but we're seeing a tremendous impact already," Fireman's Fund Risk Services Manager Richard Standring says.

Thermographers conduct basement-to-attic scans with the cameras, looking for trouble signs. The cameras sense infrared radiation, letting inspectors "see" hot or cool spots behind walls, above ceilings and under floors. A hot reading may indicate an electrical hot spot, which could be a fire hazard. A cool reading could indicate a wet area from a leaky pipe or roof.

He recalls one scan of a brand-new $8 million home. The builder said everything was ship-shape. But the camera detected a cool spot in a ceiling, and inspectors traced the problem to an icemaker in the master suite kitchenette upstairs.

"There was a slow drip behind the built-in cabinetry," Standring says.

The cause: a faulty 37-cent clip.

Had the problem gone undetected, the results would have been catastrophic.

"If that ceiling had collapsed, it would have been $125,000 of damage," Standring says.

That's just one of many examples of where the camera scans have headed off disaster or helped the company make prudent decisions about whether to insure a home, he adds. (See: " You're not patching my cherry wood with that!")

High-tech tools help prevent home insurance claims

Not all technology is limited to the high-end market. USAA launched an online risk-assessment tool last year for all its home insurance customers.

The computer program lets users enter an address and learn the risks for flooding, wildfire and storm surge, depending on the state. The data is rich enough to give an assessment for a precise property, not just the general area, says Melissa Digby, national loss prevention director at USAA. One home might be at a higher risk for wildfire, for instance, than another just a block away.

USAA launched the tool in August 2012 and plans to make it more robust, eventually offering assessments for other risks, such as theft and hail. The insurer serves military families, who move frequently. (See: "Don't get dinged by new hail and wind exclusion.")

"We've heard our members say, 'If I would have only known more about this home, I wouldn't have purchased it, or I would have protected it better against this risk,'" Digby says.

A big plus for the home insurance industry is that cost of gadgetry continues to drop as technology advances.

Take water alarms, for instance. A "Cadillac" system runs a few thousand dollars. These alarms, which must be professionally installed, automatically shut off the water when a problem is detected and, if connected to a security system, send you a text alert. (See: "5 home insurance discounts you don't know about.")

But simple, battery-operated alarms, which sound when their sensors detect water, sell for less than 20 bucks. USAA sells inexpensive water alarms through its members-only shop. Placed behind appliances and under sinks, a few cheap alarms can save tens of thousands of dollars in damage.

Water leaks account for a third of USAA claims that aren't the result of a natural disaster, and roughly half stem from problems that could have been prevented, Digby says.

Home insurance trends on the horizon

Insurance companies, meanwhile, are exploring new technology. USAA has a patent for a "data recorder" that could be installed in a house or other building to record conditions.

"The information captured by the recorder may be used to analyze an event that causes damage or destruction to the house," a summary states. "Or, the information may be used to analyze conditions that are present at the house, in advance of any actual damage event."

The data could help with underwriting, claims or other decisions, the patent says.

A USAA spokesperson said the company didn't have any information to share about the technology or how it might put it to use.

The Hartford, meanwhile, filed a patent for a system that would use spectral images to assess the condition of an insured property. The method would use the non-visible portion of the electromagnetic spectrum to identify chemical changes caused by wildfires and other natural disasters. If such a change were detected, an insurance claim could be started, subject to confirmation, to expedite the claims process for the property owner, spokesperson Thomas Hambrick said in an email.

But he emphasized that the company has no plans yet to implement the invention. "This is a future concept patent," he said.

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