Should You Save Money By Increasing Your Deductible?

Did you know that you can save up to about 40% in your homeowner’s insurance premiums if you raise the deductible on your policy? However, with that savings comes a huge risk, and the amount you could save depends on where you live.


Savings vary from state to state, so do your research and apply your personal financial situation in your analysis before considering to increase your deductibles.


The lower your deductible, the higher your premiums. And, of course, the higher your deductible, the lower your premiums.


Higher deductible = lower premium


According to, increasing your deductible from $500 to $2,000 could save you, on average, 16%. The amount of discounts varies by state. Policyholders in Florida can save 23%, Rhode Island residents, 26%, and North Carolina homeowners and renters can save 41% by increasing their out-of-pocket risks. On the other side of this comparison, policyholders in Hawaii receive only an average of a 4% savings and Texans only 6%.


As you can see, there is a wide range of the deductible discounts. This is an exercise where it would be beneficial to put pencil to paper and decide what is best for you. How much can you handle if you have a loss – without causing financial issues? Can you afford only the $500? Then that amount of deductible is probably your best option. But if you can handle $5,000 if you experience a loss, then taking the discount would be a wise financial decision.


Remember, too, that the higher the deductible, the fewer times you will be able to file a claim. With the $5,000 deductible scenario, if you have a theft of items that total less than $5,000, you will have to replace everything yourself.


Is it worth the risk?


These are serious considerations. Talk to your insurance agent. Find out the amount of discount  your insurance company will provide if you increase your deductible. Will you save that much in premiums over a period of time? Is that period of time to break even worth the risk?


Only you can decide what’s best for you. Another risk regarding your insurance policy is not having home and business contents inventories. These are created so you will have the information readily available after a loss. This document will help you remember what you owned – and prove ownership of the items – so you can complete a thorough insurance claim.