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Personal Perspective


By April 1, 2009No Comments

As money gets increasingly tight, consumers are trying to save wherever possible. Insurance policies are one place that people typically look to cut costs. But, are there ways you can save when it comes to insurance without jeopardizing your coverage? Many insureds believe so. One method of cutting back on your premium costs is to reduce the dwelling or liability limits on your homeowner’s policy. Similarly, you could also request a reduction in the liability limits on your Auto insurance policy.

However, not only do these methods fail to save you money in the long run, they also make you increasingly vulnerable to risk. Consider how much you could lose if a judge decided against you in a liability suit, or someone was hurt in your home.

A wiser course of action is to increase your policy deductibles. On a homeowner’s policy, raising your deductible from $250 to a $500 could realize a premium savings of 10% to 15%. You could also consider raising the deductibles on the physical damage section of your Auto insurance to save money on the premium. Having a $500 deductible on both comprehensive and collision can save you as much as 30%. A $1,000 deductible could result in even more savings.

Many insureds argue that if they do need to file a claim, they won’t have $500 to cover the newly increased deductible. Although $500 might sound like a large amount of money to get together, it is actually only $250 more than you would have needed if you still had the original $250 deductible. Keep in mind that with the savings benefit you will get from a higher deductible, you should be able to save that extra $250 in less than 2 years.

For those larger savings, consider a graduated approach. If you are not financially able to go from paying a $250 deductible to paying $1,000 deductible, raise your deductible to $500 now, and put the money you save into a dedicated savings account for the purpose of accumulating money to increase your deductible again. When you have saved enough in the account, increase the deductible to $1,000.

Raising your deductible will definitely save you money over the long-term. More importantly, it will not put you at an increased financial risk. Give our office a call today!