We know that costs on everything have gone up recently, including home and auto insurance. If you are looking for ways to save, I would highly recommend increasing your deductibles on your home and auto policies.
I know years ago I raised my deductibles. I raised my auto insurance deductible from $500 to $1000 and saved $700 per year over the past five years. I did have a deer claim and hated writing the larger check for that, but I reminded myself I had saved $3500 over the past five years.
Increasing your home insurance deductible from $1000 to $2500 can save you about 13% each year. I personally would not turn in a small claim that would be worth less than $2500 on my home insurance anyways. Remember, a claim is a claim, no matter how small.
For home insurance, it may several years to break even. For example, increasing your deductible from $1000 to $2500 means you would have to pay $1500 more than before if you had a claim. However, say your premium is now $300 less per year due to selecting the higher deductible. After 5 years, you would have spent that $1500 ($300 per year x 5 years) on your premium, so now if you had a claim you would be spending the same amount, it just comes out as a deductible. The good thing is if you don’t have a claim, you get to keep this money.
On auto insurance, most people are choosing $1000 deductibles versus $500, which usually can break even in one to two years. Again, the encouragement is to not turn in small claims.
Insurance companies really want all of us to have more skin in the game, and taking a higher deductible means we are taking on a little bit of the financial responsibility of that risk ourselves. This guide goes into more detail on What Policyholders Need to Know About Home & Auto Insurance.
Another thing to think about, if you have access to professionals in an auto body shop or handymen for home repairs, you can probably hire them at a lower cost than what is charged to an insurance company, so you don’t have to turn in a claim for smaller things.
This may also be the time to set up an emergency fund, if you have not already. That way, when you need your deductible, it’s sitting in an account and you’re not caught short.
We would be happy to review all your policies to see how we can help you reduce your cost by increasing your deductibles.
In case you missed it – we have created a guide on What Policyholders Need to Know About Home & Auto Insurance.
We hope this information helps you to make more strategic insurance decisions. We’d love to hear from you – please reach out! We are here to help.
