Burglar alarms, fire alarms, and other safety and detection devices could earn you a discount on your home insurance rates, but before you buy, ask your insurer what qualifies. Depending on the cost of a security system and its monitoring, the system could cost more than it saves.
Our editorial team thoroughly researched guidance from the Insurance Bureau of Canada on lowering your home insurance rate and coverage options, the City of Toronto’s false-alarm fees, and the Canadian Centre for Cyber Security’s advice for protecting connected devices at home.
Can a Home Security System Lower Your Insurance Cost?
Yes, it can. The Insurance Bureau of Canada lists burglar alarms among loss-prevention devices that can potentially lower home insurance rates and tells homeowners to contact their insurer. There is no universal Canadian discount. The device, certificate, monitoring arrangement, home, policy and insurer all matter.
Ask for the dollar difference on the same quote with and without the device. A percentage alone can mislead because 5% of a $1,200 premium is $60, while 5% of a $3,000 premium is $150. Confirm whether the percentage applies to the full premium or only part of it.
What Insurers May Recognize
There are no universal tiers of discounting for security systems, so compare them based on what your insurer will look for when verifying the system, including the dollar difference in the quoted premium. Look for types of equipment, installation, monitoring arrangements, certificates and response procedures required for verification.
| System setup | What to ask the insurer | Proof or condition to confirm |
|---|---|---|
| Local alarm or self- monitored camera | Would an audible alert or app-only alert qualify? | Model number and date of installation |
| Professionally monitored intrusion alarm | Which monitoring stations and response standards are acceptable? | Monitoring certificate, service address and contract status |
| Monitored fire or carbon monoxide alarm | Is there a discount? Does the device meet local regulations? | Installation record, monitoring certificate and testing schedule |
| Water sensor or automatic shut-off | Would a sensor be eligible, or does it have to shut off automatically? | Model, location, installer and active notifications |
| Connected multi- device system | Are devices assessed separately or under one program? | Accepted provider, active features, software support and monitoring record |
Security System ROI Calculator: Yearly Cost vs. Insurance Savings
Calculate the return using the discount shown on your own quote, not an advertised maximum. Compare that annual saving with installation, monitoring, permit and maintenance costs.
Use this calculation: five-year system cost equals installation cost plus 60 monthly fees plus permits and expected maintenance. Five-year insurance savings equals the confirmed annual discount multiplied by five. Subtract the savings from the cost.
Example: a $200 installation with a $20 monthly fee costs $1,400 over five years before permits or maintenance ($200 + $20 × 60). A confirmed $60 annual discount saves $300 over five years, leaving a net system cost of $1,100. You may still value the alarm for loss prevention or faster alerts, but it does not pay for itself through that insurance discount.
If annual monitoring and maintenance cost more than the annual insurance discount, the system will not break even through insurance savings alone. That does not make it useless. It means the decision should be based on protection and convenience, not just price.
Check Contracts, Permits and False-Alarm Costs
Read the fine print and understand the length of the contract and its renewal or cancellation conditions, who owns the alarm and possible price increases.
Ask questions about system operation: Who gets notified of alarms, and under what circumstances would help be called? What happens if the phone, internet or power are disconnected?
Find out about any bylaws regarding alarms and the cost of false alarms that call emergency services, which varies by municipality. For example, Toronto has fees for nuisance or malicious false alarms that result in the fire department responding. Check the rules and fees for your location.
Think ahead to possible changes or moves, system modifications, regular checks and battery replacement.
How Location Affects the Base Rate—not the Discount
Home insurance rates are partly based on location, so it’s not necessarily true that people in higher-crime areas receive a bigger dollar or percentage discount.
But if you want to see what difference a qualifying alarm would make to your rate, get quotes with and without it for the same house. Comparing insurance quotes for two different homes in two different neighbourhoods doesn’t answer the question.
Bundling Smart Devices for Bigger Discounts
Although combining intrusion, fire and water-protection devices can help minimize losses from different causes, it doesn’t necessarily mean you’ll receive a larger discount. Find out what equipment your insurer recognizes, whether monitoring is required for some discounts and whether adding another piece of equipment will affect your bottom line.
A leak detector may have value even if it doesn’t lower your insurance costs; if it gives you warning of a leak, you may be able to prevent a flood. The detector must be located appropriately, provide timely notice and have someone available to respond. Don’t describe a detector as insurance; it’s not.
Read More: Learn How to Test Your Smoke Alarms
The Role of Cybersecurity in Home Security Discounts
The Canadian Centre for Cyber Security has some tips for better home security, including:
- Use strong, unique passwords rather than manufacturer-provided default passwords.
- Use multi-factor authentication where possible.
- Keep your software up to date.
- Know who has access to cloud-based storage, cameras, microphones and accounts.
- Remove access for former residents, service providers and outdated devices.
Read More: See How Home Insurance Treats Theft and Break-Ins
The Impact of Security Systems on Condo and Rental Insurance
It’s important to separate the security system installed by the condo corporation and any alarm or security system within your condo. Tell the insurer about both. Your condo may offer security-related amenities such as cameras or fob entry, but your insurer may not consider them an alarm or security system.
Check with your landlord before changing locks, drilling, running wires or installing cameras. Ask your insurer if there’s a difference in quotes for monitored or non-monitored and portable or non-portable security products. Check with your landlord, lease agreement and applicable privacy regulations before recording footage of your neighbour’s property or your building’s common areas.