Risky Business

When it comes down to it, security systems and insurance are both doing the same thing. Protecting you from risk.

There is always risk associated with your home or business property and content, whether from accidental or intentional incidents. At the end of the day, it’s how you chose to deal with that risk.

In dealing with risk you have three basic options:

  1. You accept the risk, meaning you sink or swim according to chance.
  2. You reduce the risk with security systems such as monitored alarms and cameras and fire protection such as sprinklers or extinguishers.
  3. You transfer the risk, by buying insurance.

Obviously, you need to think very hard about choosing the first option. It could mean you lose everything. Most people opt for a combination of options two and three. Security and fire protection to try and avoid any incidents, and insurance to cover the costs if anything does happen.

Now, just like any business, the insurance companies are keen to protect themselves from risk too. They understand that security alarms and CCTV systems are effective at deterring thieves, thus reducing the risk of insurance claims. Makes sense.

We spoke to insurance brokers Financial Independence about the link between insurance and security. They offered three pieces of advice.

#1. With residential properties, you can get discounts on your insurance if you have an alarm, and further discounts if you have a monitored alarm. Be sure to let your insurance adviser know if you have one installed.

#2. With commercial alarms make sure you advise your insurance broker about your security set-up. Sometimes insurers will require set levels of security to be in place to offer cover. But, improved security means your business is a more attractive risk, and insurers are happier to insure it, which results in more competitive terms and premiums.

#3. If you have advised that you have a specific level of security in place either at home or in your business, make sure you are using the security as specified. If anything has changed and you are no longer using that security, make sure you advise your broker. If you don’t advise your broker or insurer of changes, you may run into trouble with your payout if there is a loss and you hadn’t been using the systems.

In the end, security and insurance are both instruments to manage your risk. Obviously here at Be Alarmed we favour a preventative approach. If your security system can thwart any threats to your property, you reduce the risk of losing money on insurance excess, any inconvenience or downtime, and the loss of irreplaceable items.

It’s up to you to decide how much risk you’re prepared to take on.