How Much Will Raising the Deductible on House Insurance Lower My Premiums?

A deductible is the amount of money you must pay after experiencing a loss before the insurance company considers paying the claim. For example, if your house suffers $10,000 worth of damage and your deductible is $1,000, the most the insurance company will pay is $9,000. Since you pay premiums annually and the odds are you won't file a claim, a higher deductible means you save more on premiums. If you raise your insurance deductible from a standard $500 to $1,000, the resulting savings might make up the difference if you do have a claim more than four years after the raise.

Make sure you understand the terms of your homeowners insurance policy. If anything is unclear or you want to clarify what is covered, ask your insurance agent. You don't want to find out after the fact that something isn't covered if you suffer a loss.

Raising the deductible on your insurance policy doesn't mean one size fits all. Depending on the region of the country, your insurance carrier might have separate deductibles for various types of damage. Wind, hail, tornadoes, earthquakes - if these natural disasters are common in your neck of the woods, that particular deductible might be separate. Ask your agent about any separate deductibles and whether your policy permits higher deductibles on those items.

In case disaster strikes and you might have trouble coming up with the higher deductible, put your annual savings from the lower premium into an account for that rainy day. You can also save money by shopping around for the best deal on a homeowner's policy, and then raising the deductible. Keeping all your insurance policies with one company can mean lower premiums.