July 16, 2013

Can you afford NOT to be protected?

Can you afford not to have security?I often hear from homeowners “I can’t afford to have a home security system” or “I have extended myself financially and can’t justify the cost of a home alarm.”

Considering all the expenses a homeowner has, utilities, insurance, taxes, repairs, decorating expenses, lawn care and others an alarm system is just one more expense you don’t need, right? Well, before you answer, let’s take a look at the financial costs of a burglary in your home. (We won’t even cover the non-financial costs which are never covered by insurance – stress, PTSD, time off from work. That’s a different post.)

According to the FBI, there were an estimated 2,188,005 burglaries in 2011. That’s one burglary every 14.4 seconds. Around 60% of burglars used force to gain entry into a person’s home. More than 30% of burglars entered residences through an unlocked door, window and other opening without force. That means most burglars were so determined to get into that home they broke a window or damaged a door to get in.

According to the FBI, the average homeowner lost $2119 in property and money in 2010. The replacement cost of the stolen property is usually evaluated by insurance and that plays a significant role. Considering the average insurance deductible ranges from $250 to $1000 that doesn’t take into account for what the insurance will deem as ‘replacement cost.

And as far as the insurance industry is concerned you have the burden of proof that (1) you actually owned the items you claim were stolen and (2) what you paid for them originally. Better have the original receipt handy!

How about grandma’s irreplaceable heirloom and that sentimental ring from dear old mom? These items will only be replaced for the actual cost of the items. What? You don’t have a store receipt? You can kiss that claim goodbye! Also, these items may never be recovered, resulting in a permanent loss.

Putting the material things and possessions aside consider the insurance premiums that often increase after a burglary. This may be a permanent future cost resulting from the burglary. This cost will vary depending on your location, policy coverage, and deductible amount.

Now, how much is that home security system going to cost?

A simple burglary alarm in a normal 1300 sq ft home usually includes three door sensors, two motion sensors, a siren, keypad and control panel (the brain). Now these systems don’t install themselves so you have to hire a licensed security installer to make everything work as they should to protect the doors and the inside of your home. Total cost for the average system including labor? Ranges from as low as $500 to about $875 depending on who you hire and where you live.

Now, someone has to be there to send the cops when the alarm goes off, right? That is called monitoring. Monitoring dispatch centers are manned 24 hours, 7 days a week, holidays, weekends, blizzards, hurricanes and other times. The cost to pay that monitoring? About $20 per month, depending on options.

So…let us look at the math here….

  • Average burglary:       $2119
  • Average Deductible:   $1000
  • Total cost to you:     $1000 out of pocket.

Now, let’s look at the alarm system:

  • Total Alarm System Investment:     $700
  • Total Monitoring for a year:              $240
  • Total cost for alarm for 1 year:     $940 over 12 months

The average homeowner’s policy costs about $600 / year. You may see a 10% increase in your rates (if you are lucky). That means, you will have to pay $60/year more for insurance for years to come.

With the number of burglaries in the the country now ask yourself this question again:

Can I Afford NOT to have a home security system?
The answer should be obvious.