In Texas, a homeowner earned a premium discount after installing an automatic water shutoff valve. To qualify for the credit, the carrier required a photo of the installed device and a paid invoice. The problem: The installer mounted the valve in an outdoor, subterranean access box. The first time it rained, the box filled with water and mud, leaving the valve useless. On paper, the home was protected. In practice, it wasn't.
In New York, another homeowner received a premium credit for installing a shutoff valve. When a leak occurred, the device shut off the water, but the water kept flowing. The installer had left a bypass loop open, allowing water to keep running even when the smart valve was "closed." Once again, the home looked protected on paper, but the risk never actually went away.
These cases aren't outliers. Across thousands of properties where carriers are providing premium credits for connected water-loss prevention devices, monitoring data shows a large portion of devices aren't actually online, potentially leaving homes vulnerable to water damage.
According to Beagle Services' Watchdog monitoring data, between 30 and 50% of smart water shutoff valves that insurers are crediting are offline.
Devices that are unplugged, disconnected from Wi-Fi or never set up correctly won't work if there's a leak.
Homeowners believe their property is being monitored when it is not, and carriers are extending credits for devices that could fail. Over time, that adds up to real dollars and increased loss potential. For one carrier, it meant more than $11 million in premium credits tied to approximately $5.7 million in exposure in homes that were not actually protected.
The obvious question: If half of these credited devices are offline, why don't insurers know? The answer: Carriers are not using a consolidated, verifiable source to determine which valves are installed and which stay online.
Smart water valves rely on consistent connectivity and periodic system checks to remain active and functioning properly. Devices that operate through Wi-Fi are vulnerable to outages or password changes that disrupt communication. Others may need occasional firmware updates or re-linking through a mobile app. When no one checks whether the device is online, the risk goes unnoticed and unaddressed.
The technology itself does mitigate risks when properly maintained. The challenge is ensuring that it is installed correctly, provisioned to the property and remains connected and functional over time.
For insurers, offline devices create an exposure that is not visible in standard reporting. Certain properties may be rated as lower-risk than they actually are. From a portfolio perspective, the result is misaligned pricing and an incomplete picture of actual mitigation effectiveness.
Accurate and uniform verification matters for another reason. If the industry assumes that every credited device is functional, but a significant portion is offline, then loss data may appear inconsistent with expectations. Over time, that can distort assumptions about the effectiveness of connected mitigation programs.
Carriers can verify whether connected mitigation devices are active using basic system data from hardware-agnostic third-party validation tools. This confirmation ensures that homes receiving premium credits are genuinely protected and that mitigation programs deliver the intended results.
Active monitoring also supports the original goal of these incentives. When devices remain functional, the likelihood of a water loss decreases significantly, claims costs are reduced and homeowners gain confidence that their systems are performing as intended.
Reducing this risk requires cooperation across the ecosystem: manufacturers design devices that notify users when connectivity is lost; homeowners test their systems periodically and ensure that they remain connected during network or power changes; and insurers can educate agents and policyholders about simple verification steps. Third-party systems also help unify these verifications into a single, straightforward platform, serving as a source of truth for carriers.
Independent monitoring services can also provide an additional layer of assurance, confirming that devices remain active and reporting on connectivity trends across large portfolios. For insurers, this represents a cost-effective way to confirm mitigation performance and strengthen the integrity of their incentive programs.
The value of smart water shutoff technology is clear. These systems reduce losses, lower claims costs and provide valuable protection for homeowners and insurers. To achieve those outcomes consistently, programs must include a method to confirm that devices remain connected and functioning properly.
As more insurers tie credits to connected technologies, monitoring will become a basic expectation rather than an added feature. When protection is verified, carriers and policyholders benefit. Homes are safer, claims are fewer and incentives pay off.
