Weighing the Value of Home Security System
By Paul Sullivan, April 30, 2010
People may be surprised to learn that when they most need their security system to protect their house, they oftentimes cannot rely on it. Jackie Ostrander discovered that when a storm knocked out power to her home in Greenwich, Conn., for a week in March — too long for her backup battery to keep going. And it took her security company three weeks to restart her system.
“I asked, ‘Are we going to get a credit for this?’ We weren’t,” she said of her company, Protection One. “When they came out, I asked, ‘Are you going to charge me for this call?’ They didn’t, but they did charge me $100 for a battery.”
Jonathan Marvin, director of business solutions for Protection One, said, “We could have done better.”
There are about 36 million security systems in the United States, half of them in homes. Revenue for the industry was $28.2 billion in 2009, according to the Installation Business Report, an annual security industry survey. So a lot of people apparently think their homes are going to be impervious to burglars.
But even when the systems are working properly, the police response times can be slow.
Stan Martin, executive director of the Security Industry Alarm Coalition, acknowledged as much. He said that in big cities like New York, Atlanta and Chicago, police could take 30 to 45 minutes to respond, while in smaller towns the best that could be hoped for was six to eight minutes. Given that those times are in addition to the two minutes it takes for the alarm to register at the monitoring station and the operator to call you, the thief and your jewelry could be long gone.
Mr. Martin also attributed part of the slow response to the high number of false alarms — an estimated 80 percent of alarm calls — and partly to the low priority of burglaries.
To combat false alarms, many police departments charge after the first or second one, he said. In Stamford, Conn., for instance, the cost is $75. Yet these fines are often levied when a police car just drives past your house, not even pulling in the driveway, let alone walking around the property.
So if you are one of the millions of Americans paying a monthly monitoring fee of $25 to nearly $100, what are you getting for your money? It turns out you get many things beyond securing your home — like providing an alert in a fire and keeping an eye on your children’s comings and goings.
WHY HAVE AN ALARM?
If no one is going to show up when your house is broken into, why bother paying the monthly fee? One reason is that insurance companies offer discounts for security systems. The percentage varies depending on the sophistication of the system, with the lowest amount for an alarm that rings just at your house and much more for the safe rooms depicted in Hollywood movies.
The Insurance Information Institute says the average discount is 15 to 20 percent. On our homeowner’s policy, the discount savings amounted to $221.93 a year. A study released last year by the School of Criminal Justice at Rutgers University found that the real value of security systems was that they protected entire neighborhoods. The study, which focused on Newark from 2001 to 2005, found that residential break-ins decreased as the density of alarms in an area increased.
In other words, the more people paying that monthly monitoring fee on your street, the more likely a burglar is not going to take a chance that a police officer is right around the corner.
DO ALARMS DETER CRIME?
When so-called smash-and-grab thieves do strike a home with an alarm system, they are more likely to leave quickly.
On its Web site, the Electronic Security Association says that the average loss on a home with a system is $3,266, compared to $5,343 for a home without one. Nearly $2,100 is nothing to sniff at — unless your years of monthly monitoring fees exceed that.
“The point of a security system is to reduce loss,” said Mike Miller, president of the security association. “It may be that instead of losing your TV, you could have lost a lot more.”
Mr. Martin said that most thieves wander neighborhoods looking for an easy entry point, like an open window. Your security system would have told you to close that window when you tried to turn it on.
Wealthier people, though, need another layer of protection since burglaries to their homes are not as opportunistic. Chances are the person who steals your Picasso when you are away did not happen upon your house by chance.
Christopher Falkenberg, president of Insite Security, which provides security for Martha Stewart’s homes, said prominent people needed levels of security beyond what alarms could provide.
“Alarms are not sophisticated,” he said, adding that basic monitoring panels have not changed in decades. “That said, you have to have one or you’re definitely going to be targeted. But your expectation can’t be that installing an alarm will be your end-all and be-all.”
Upgrading to the level of personalized protection that a firm like Insite provides is not cheap: its monthly rate starts at $7,000.
From an insurance point of view, this is where the discounts start to increase. “We recommend a layered approach so you are going to build out from a security system,” said Rich Standring, risk services manager for the East Coast for Fireman’s Fund. “The one shortcoming of a security system is you have to turn it on.”
While keeping burglars out of your house is the foundation of any security system, the monitoring service can include fire alarms, heat sensors and other features.
Robin Lampe, a spokeswoman for Protection One, said the company’s systems offered additional ways to monitor your home. The system can tell when someone has entered or left a house and when a person is trying to open a liquor or gun cabinet. It can also send video clips of who has entered a house or even a specific room — a great tool for parents eager to see what their children are up to.
But in every instance, the security system is only as good as the operator responding to the alert. Jonathan Crystal, who advises customers on their security needs as an executive vice president for Frank Crystal & Company, said he was traveling and got a call from his monitoring company telling him that the smoke alarm was going off in his home. He knew his baby sitter was there and asked the operator if she had spoken to her.
“I asked the woman if everyone was O.K.,” Mr. Crystal said, “But she said she hadn’t asked, because the person who answered was not authorized on the account.”
Mr. Crystal, who would not let me name the security company in print, said he was completely exasperated and ended up switching to a local company, Scarsdale Security. “They didn’t change my system at all, but they provide remote monitoring and they’re excellent,” he said. “They give me peace of mind. I got no peace of mind from” the national service.
While paying a monthly monitoring fee may make little financial sense, finding a service that provides you peace of mind is invaluable.