How much can you save by changing your deductible?

• Insurance rates have increased
• But there are some ways to save
• Here we tell you how to do it

According to ValuePenguin, homeowners insurance rates have steadily increased» by a cumulative total of 19.1%» between 2018 and 2023.

Although rate increases appear to be slowing, last year the overall average increase was 4.9% compared to 2.8% so far this year.

However, there may be steps you can take to reduce your costs.

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One way to save on homeowners insurance (and auto insurance) is to increase your deductible.

But how much can you really save and is it worth increasing your deductible?

If you file a homeowners insurance claim, your deductible is the amount you must pay to repair or replace any damaged or stolen property before your insurer steps in.

It is common for a homeowners insurance deductible to range between $500 and $2,500.

Multiple deductibles

It is also possible to have multiple deductibles on a single policy, as some insurers allow different deductibles for different types of coverage.

For example, you might have one deductible for home coverage, another deductible for storm and hail coverage, and a third deductible for tropical cyclone coverage.

However, depending on your insurer, your deductible may not be as simple as a fixed dollar amount.

There are two main types of homeowners insurance deductibles: fixed deductibles and percentage-based deductibles.

Types of Fixed Deductibles

A fixed deductible, also known as a flat deductible, is a set dollar amount that you can choose in increments allowed by your insurer.

For example, an insurance company might allow its policyholders to choose a deductible between $1,000 and $10,000 in increments of $1,000.

A percentage-based deductible is a deductible based on a percentage of your policy’s coverage limits.

With companies that offer percentage-based deductibles, it is common to see options for a deductible of 1% or 2% of your coverage limit.

Things to keep in mind before increasing your deductible

Before calling your insurer to increase your deductible, here are three important things to consider:

1. You may not have many options when it comes to your deductible. Check your mortgage contract before increasing your deductible if your house is not fully paid for.

2. You should look for the point at which the benefit of increasing your deductible reaches its maximum. Call your company to find out how much your premium will decrease.

3. You should think of your deductible as a starting point for what you will have to pay out of pocket when filing a claim.

Other Ways to Save

You never want to have a deductible that you can’t pay in the event of an unexpected catastrophe.

So, while increasing the deductible on your homeowners insurance policy is a guaranteed way to save on your premium, it may not always be an option.

So, here are five other ways to save money on your homeowners insurance:

1. Compare prices. Start by putting together a list of reliable homeowners insurance companies. You will need at least three companies to consider.

More tips

2. Group your insurance policies. If, for example, your car insurance and home are with two different companies, you are likely missing out on savings.

3. Ask about discounts. Ask about discounts you qualify for before you sign up. Or call your insurance carrier and ask if there are any additional ways you can save.

4. Improve your home security and/or security features. A fire detector is a great example of a safety feature that can save you money.

5. Improve your credit score. The insurance world is all about risk. You pay your insurer to assume the risk of protecting your property in case of unexpected damage.