Should you increase your homeowner’s insurance deductible? If you own a house, you need homeowner’s insurance. You may be able to lower your premiums significantly and save money each month by raising your homeowner’s insurance deductible. But before you do so, weigh the pros and cons.

Benefits of a Higher Homeowner’s Insurance Deductible

A higher homeowner’s insurance deductible will generally give you lower premiums than a similar policy with a lower deductible. The policyholder assumes more responsibility for paying for repairs and replacing damaged property in exchange for lower premiums. This reduces the insurance company’s risk, since policyholders file fewer claims, and the insurer pays out less for approved claims. If you chose a higher deductible and didn’t file any claims for several years, you might qualify for discounts that could reduce your premiums even further.   You might even put the money that you are saving into a special savings account so that if you ever do need to make repairs, you have the money put aside.  This is just one of the questions you should consider when talking to your insurance agent.  Here are some other considerations. 

Can You Afford a Higher Homeowner’s Insurance Deductible?

If you switched to a higher homeowner’s insurance deductible and went several years without submitting a claim, the amount you saved in premiums could be enough to cover the deductible if you eventually needed to file a claim. Before you decide to raise your deductible, make sure you have that amount of money set aside or can save it in a reasonable period of time. If you didn’t have enough money to cover a deductible and your house suffered major damage, you could be forced to continue living there without having problems fixed, which means they could get even worse.

If you experienced a significant loss, having to pay a large deductible could be a tough pill to swallow. Knowing that your insurer would foot most of the bill could be comforting. Insurance companies typically offer policies with a range of deductibles. It might make sense to raise your deductible, but not to the highest amount the company would allow.

PLEASE remember to bank that savings so that it is there in case you actually have that emergency!

How Much Can You Save by Raising Your Deductible?

Where you live could have a significant effect on how much your premiums would go down with a higher deductible. In some places, you could save a lot, while in other locations your potential savings might not make it worthwhile to raise your deductible.

Most insurance policies have a single homeowner’s insurance deductible amount that applies to all claims, but some have different deductibles for liability, wind and hail. Make sure you know what the deductible is for different perils.  You want to consider how likely you are to experience a hail storm or a flood before you adjust your deductible.

Good Idea (or Not) to Raise Your Deductible?

Raising your homeowner’s insurance deductible could save you money each month, but it could leave you in a bind if your house needed repairs or if your belongings were damaged or stolen and you didn’t have enough money to pay the deductible. Contact your insurance company or agent to discuss your options and your overall financial situation so you can choose a deductible and premium that are comfortable for you.  You could definitely enjoy the savings as long as you put aside enough to cover that higher deductible.  Be sensible – and you will be grateful for the savings.

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