Nonsmoker discount on homeowners policies declining

Using a nonsmoker’s discount as a selling point is on its way out, as more and more carriers eliminate the coverage.

Insurance News


Back when many Americans lit up inside their homes, a homeowners discount for nonsmokers—who were a significantly less likely fire hazard—made sense. These days, however, a combination of health and technology factors mean more and more carriers are dropping or decreasing the discount.

Vermont Mutual Insurance Co., which covers homeowners policyholders in seven states in the Northeastern US, is one of the latest companies to roll back their nonsmokers discount. Previously a 5% decrease in premium, Vermont Mutual is now offering a 2% discount and plans to eventually axe the program entirely.

The company attributed the discount decrease to a drop in the number of US adults who smoke—just 19% in 2011.  That sentiment was echoed by Ann Myhr, a senior director of knowledge resources with The Institutes.

“I think carriers who have discontinued [the nonsmokers discount] have probably done so because it isn’t that big of a factor anymore,” Myhr said. “The population as a whole is more health conscious and there are just fewer smokers in general.”

Myhr also mentioned that the advent of technology allowing consumers to purchase homeowners insurance online or over the phone with their agent makes verification of nonsmoker status more difficult.  

“Many years ago, you went to the agent’s office or the agent came to your home. You were both members of the same community, so it was a little easier to verify if someone was a smoker or not,” she said. “Now, very few people apply in person and it’s difficult to tell if someone is telling you the truth.”

Myhr added that several nationwide carriers, such as Farmers, still offer the nonsmokers discount, but it is becoming less of a selling point for agents and brokers. Instead, factors like burglar alarms and smoke detectors will make more of a difference in final homeowners premiums.

As such, it’s hard to imagine producers mourning the loss of the discount.

“My sense is that it was never the number one selling point,” Myhr said. “It was a tool in the overall toolkit that agents could use as a selling tool, but I don’t think it was ever a make-it-or-break-it point.”

Indeed, North Carolina producer Jody Brown of LifeStore Insurance was surprised to learn the discount still existed with some carriers.

“I’m not familiar with any nonsmoker discount that’s actually active and functioning with any of the companies we represent,” he said.

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