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Should I increase my home insurance deductibles?

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Mark Blog PhotoOne way to save money on your home insurance premiums is by selecting a higher deductible. A deductible is the amount you pay out of your own pocket before the insurance policy begins to pay. The higher the deductible, the lower your premium. You can also think of it this way -  the more risk you take on, the less your insurance will cost.

Your ability to pay the deductible is an important consideration when choosing a level that is right for you. Even if you believe that paying a higher deductible to reduce your premium is a sound theory, a $1,000 deductible makes little sense if the payment creates significant hardship for you and your family.

Deciding on what deductible is right for you is a decision only you can make. However, there are three important things to consider when you are making that decision:

  1. Cost savings. When you accept a higher deductible, cost goes down. Ask your insurance representative to give you the figures for cost savings with different deductible levels.
  2. Cash flow. Can you write a check for $1000 at the drop of a hat? If not, that deductible may be too large for you. Review your deductibles periodically to see how they fit your cash flow position.
  3. Insurability. For small losses, try to pay out of pocket. Insurance is designed to cover catastrophic losses. If you have a number of small claims, your premium may increase or you could lose your coverage. Discuss this issue with your insurance representative when deciding on a deductible.

 If you have questions about whether you should choose a higher deductible, call one of our Member Service Consultants at 1-800-279-4010.

Mark Dannehl, Personal Insurance Consultant