Raising the deductible on your home insurance policy is one proven way to save on your premiums, but it’s not always the best financial move, says a new state-by-state, study by insuranceQuotes.
The study examined three different scenarios for raising deductibles and how much each increase allows consumers to save on average:
– $500 to $1,000: 7% savings
– $500 to $2,000: 16% savings
– $500 to $5,000: 28% savings
“Choosing a higher deductible means you share more potential financial risk with an insurer and also makes you less likely to file a claim. In return, insurers charge a lower premium,” says Laura Adams, senior insurance analyst for insuranceQuotes.
When it comes to premium savings, no two states are created equal. For instance, North Carolina homeowners see the highest savings when increasing a deductible from $500 to $2,000: 39%. Going from $500 to $5,000 saves 45%.
The lowest savings are in Texas, Hawaii and Indiana, where homeowners save less than 7% on average by increasing a deductible from $500 to $2,000. Savings are also on the low side in Delaware.
“What you do with your home insurance deductible should depend on where you live. If there’s no significant savings, it may not make financial sense to increase your deductible. Be sure to review your coverage every couple of years to make sure your policy and insurance provider is still right for you,” says Adams.
