Why Would I Want to Raise My Insurance Deductible?


We’re all looking for ways to save a buck or two. When it comes to homeowners insurance, a great way to put more money in your wallet is to bump up your deductible.

“Won’t I have to pay more when I make a claim?” most people ask. Yes, but you’ll likely save in the long run.

If you’re like the average homeowner, you’ll make a claim only once every nine years (and often wait considerably longer). If you can save a little more than $100 a year in premiums by raising your deductible, the math typically works out in your favor.

Making this adjustment to your deductible results in a threefold benefit:

Lower premiums: A higher deductible reduces the cost of your insurance.

Increased cash flow: With less money flowing out of your account to cover insurance premiums, you have more on hand to cover other regular expenses (like groceries, the heating bill, and transportation expenses).

Reduced claims: If you have a small loss or theft, where costs will likely fall short of your deductible amount, you can opt to not file this claim and decide whether you want to replace the item. Fewer claims help keep your premiums lower.

If you decide to go this money-saving route, it is important to establish a savings “buffer” by creating an emergency fund that you can easily access if you need to cover the full deductible. Your insurance advisor can review deductible and premium options with you to determine the best fit for your financial needs.