{"id":185731,"date":"2025-11-19T13:25:16","date_gmt":"2025-11-19T20:25:16","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=185731"},"modified":"2025-11-19T13:25:19","modified_gmt":"2025-11-19T20:25:19","slug":"digital-twin-tech-could-reduce-insurance-costs-for-landlords","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/digital-twin-tech-could-reduce-insurance-costs-for-landlords","title":{"rendered":"The Silicon Valley Innovation That Could Help Landlords Cut Soaring Insurance Costs"},"content":{"rendered":"\n

It may sound like a creation from a science fiction movie, but <\/span>digital twin technology<\/span><\/a> has been around for a while. <\/span>It’s used<\/span> in a variety of industries, from manufacturing to medical and the military. However, its latest application is particularly relevant to real estate investors, as it could dramatically reduce the cost of soaring home insurance premiums.<\/span><\/p>\n\n\n\n

Insurance costs in climate-challenged areas like Florida and California have <\/span>escalated dramatically<\/span><\/a> in recent years. Last year, a Silicon Valley-based company composed of tech veterans launched <\/span>Stand Insurance<\/span><\/a> to help address the issue. The company used artificial intelligence (AI)-generated digital twin technology to create a lifelike 3D model of a home to help predict outcomes in real-life scenarios should an extreme climate event, such as a <\/span>wildfire<\/span><\/a> or <\/span>hurricane<\/span><\/a>, occur.<\/span><\/p>\n\n\n\n

Other insurers partner with digital twin specialists such as the CoStar-owned<\/span> Matterport<\/span><\/a> and <\/span>ZestyAI. <\/span><\/a><\/p>\n\n\n\n

A New Chapter for Hard-to-Insure Properties<\/span><\/h2>\n\n\n\n

The result of dramatic insurance losses has led to the exodus of many insurance companies from California and Florida, making these places hard to insure.<\/span><\/p>\n\n\n\n

“Traditional ways to price insurance don’t work in an environment that’s so unpredictable,” Stand co-founder and CEO Dan Preston told<\/span> The Wall Street Journal<\/span><\/a><\/em> in 2024 when the company <\/span>was launched<\/span>, referring to climate-related risks. <\/span>In October, the innovative insurer raised $35 billion in a Series B funding <\/span>with a view<\/span> to <\/span>expanding<\/span> operations from California to hurricane-ravaged Florida, <\/span>Realtor.com<\/span><\/a> reported.<\/span> <\/span><\/p>\n\n\n\n

Stand<\/span> is not for everyone or every home. It only covers homes in California valued between $2 million and $10 million, the<\/span> Wall Street Journal<\/span><\/a><\/em> reports. For a $3 million home in a high wildfire risk region, coverage could cost $12,000 to $15,000 with Stand, Preston said. Meanwhile, on its website, ZestyAI purports to offer real-time insights for over 150 million U.S.-based properties. <\/span><\/p>\n\n\n\n

\u201cStrictly Science-Based\u201d<\/span><\/h2>\n\n\n\n

Unlike conventional insurance companies, Stand and ZestyAI take a strictly science-based approach to risk assessment, rather than the traditional location and dwelling type used by most insurers\u2014i.e., “a flood zone and a wood structure with vinyl siding,” etc. Both companies, however, go deeper, creating a 3D digital replica that factors in construction, foliage, and surrounding topography; simulates extreme weather events; and formulates a bespoke insurance policy based on that simulation.<\/span><\/p>\n\n\n\n

In addition to climate-related claims, ZestyAI recently launched Z-WATER, which uses AI to predict the frequency and severity of non-weather water and freeze claims, such as burst pipes, for every property in the country.<\/span><\/p>\n\n\n\n

Kumar Dhuvur, co-founder and chief product officer of ZestyAI, said in a <\/span>statement<\/span><\/a>:<\/span><\/p>\n\n\n\n

\u201cThe landscape of non-weather water claims is shifting, with a concerning trend towards increased claim severity. The rising cost of building materials and labor has inflated claim payouts. Additionally, the interconnected nature of our homes, with open floor plans, finished basements, and high-value electronics, means water damage can have a significantly higher price tag.”  <\/span><\/em><\/p>\n\n\n\n

Digital Twin Tech Is Increasingly Prevalent<\/span><\/h2>\n\n\n\n

You are likely already familiar with digital twin real estate technology. Matterport uses digital twins in its latest upgrade to showcase houses and buildings across its listing sites, such as Homes.com and Loop.net. Zillow has something similar with its<\/span> 3D Home<\/span><\/a> app.<\/span><\/p>\n\n\n\n

Digital twin technology takes much of the guesswork out of insurance, speeding up claim processing, eliminating fraud, and offering insurance carriers a greater basis for underwriting, potentially leading to lower premiums, according to software developer<\/span> Fingent<\/span><\/a> and insurance trade publication<\/span> Risk & Insurance<\/span><\/a><\/em>.<\/span><\/p>\n\n\n\n

A $149 Billion Industry<\/span><\/h2>\n\n\n\n

By 2030, the<\/span> digital twin market<\/span><\/a> in insurance and financial services <\/span>is projected<\/span> to exceed $149 billion as the industry adapts to it. <\/span><\/p>\n\n\n\n

According to Realtor.com’s<\/span> 2025 Housing and Climate Risk Report<\/span><\/a>, about 1 in 4 homes currently face severe or extreme climate risk.<\/span> Fannie Mae<\/span><\/a> CEO Priscilla Almodovar told<\/span> Fortune<\/span><\/a> <\/em>that each year since 2021, the U.S. has averaged 22 natural disasters with damage exceeding $1 billion, indicative of the growing problem posed by extreme weather. In the 1980s, the average was three per year.<\/span><\/p>\n\n\n\n

\u201cA Tailor-Made Action Plan\u201d<\/span><\/h2>\n\n\n\n

Homeowners who follow Stand’s guidance, including wildfire-proofing measures, are eligible for insurance with premium discounts. “That basically tells us what the vulnerabilities are that you need to remedy,” CEO Dan Preston said, as reported by the<\/span> Los Angeles Times<\/span><\/a><\/em>.<\/span><\/p>\n\n\n\n

Fighting Insurers to Get Paid<\/span><\/h2>\n\n\n\n

Digital twin technology could prove pivotal for real estate investors in <\/span>the<\/span> fight <\/span>against insurers<\/span> to <\/span>receive<\/span> payouts.<\/span> The end-to-end virtual documentation reduces disputes, as insurance companies and owners can conduct a virtual “walk-through” and agree on the facts together, according to a<\/span> Matterport blog<\/span><\/a>.<\/span><\/p>\n\n\n\n

Additionally, the software company’s features, such as legal-grade metadata, help twin models in litigation, making them a valuable resource for small landlords who cannot afford expensive legal battles. <\/span><\/p>\n\n\n\n

Practical Steps for Landlords to Lower Insurance<\/span><\/h2>\n\n\n\n

Before using digital twin technology<\/span><\/h3>\n\n\n\n
    \n
  1. Perform a risk audit:<\/span><\/strong> Walk your property with a licensed inspector or insurance expert to identify vulnerabilities.<\/span><\/li>\n\n\n\n
  2. Invest in prevention: <\/span><\/strong>Take<\/span> the expert’s recommendations and <\/span>perform<\/span> the <\/span>relevant<\/span> upgrades to your home.<\/span> Photograph and log all improvements.<\/span><\/li>\n<\/ol>\n\n\n\n

    With digital twins<\/span><\/h3>\n\n\n\n
      \n
    1. Digitize your property:<\/span><\/strong> Use widely available tools like Matterport or<\/span> Hover<\/span><\/a> to create a 3D model of your home. A clear virtual record helps insurers verify upgrades and conditions.<\/span><\/li>\n\n\n\n
    2. Document every upgrade:<\/span><\/strong> Upload proof of mitigations\u2014such as roof reinforcements, flood barriers, and electrical upgrades\u2014into your twin for validation. Provide evidence of the enhancements from contractors, including certificates of work and inspection reports.<\/span><\/li>\n\n\n\n
    3. Contact insurers that <\/span>work with<\/span> digital twin tech: <\/span><\/strong>Insurance companies such as Stand <\/span>that use digital twin technology<\/span> can run simulations using your information to offer quotes.<\/span>\u00a0<\/span><\/li>\n\n\n\n
    4. Ask for resilience credits: <\/span><\/strong>Ask for credits for verified safety measures. Ensure these <\/span>are factored<\/span> into your final quote.<\/span><\/li>\n\n\n\n
    5. Automate maintenance logs:<\/span><\/strong> Some digital twin platforms let you track maintenance events and inspections, helping you negotiate lower rates over time.<\/span><\/li>\n<\/ol>\n\n\n\n

      Final Thoughts<\/span><\/h2>\n\n\n\n

      No home is entirely weather- or disaster-proof, but having some insurance is better than none, and having less expensive insurance is better than exorbitant coverage that kills <\/span>cash flow<\/span><\/a>. Also, touting robust safety features in disaster-prone areas is attractive to potential renters. <\/span><\/p>\n\n\n\n

      As extreme weather incidents increase <\/span>in<\/span> the U.S., the insurance issue will no longer <\/span>be <\/span>restricted<\/span> to states with <\/span>lots of<\/span> natural disasters, like Florida and California.<\/span> If landlords wish to run a safe and successful business, securing their first line of defense\u2014a thorough, effective, and affordable insurance policy\u2014is paramount.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

      It may sound like a creation from a science fiction movie, but digital twin technology has been around for a while. It’s used in a variety of industries, from manufacturing […]<\/p>\n","protected":false},"author":613725,"featured_media":185502,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[7401],"tags":[],"class_list":["post-185731","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-insurance"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/185731","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/613725"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=185731"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/185731\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/185502"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=185731"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=185731"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=185731"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}