The Home Insurance Move That Could Save You $440 a Year
For homeowners, a higher deductible could unlock some real savings. But, before you adjust your coverage, it is worth checking whether this move actually makes sense for you.
The best time to look into it is before your next renewal. That is when you can make changes and start saving, rather than waiting until your policy locks in for the year ahead.
The One Move That Could Save You Hundreds
When it comes to a lower annual premium, it may be as simple as raising your deductible. Think of your deductible as the amount you pay out of pocket when you file a claim, before your insurance kicks in.
According to an analysis from Insurify, homeowners who raise their deductible from $1,000 to $2,000 could save an average of about $440 a year. That is a meaningful difference, especially when household costs are already tight.
Why Premiums Have Been Climbing
Home insurance costs have climbed sharply in recent years. According to the Intercontinental Exchange, the average annual premium in the U.S. has more than doubled since 2020. The good news? The pace of those increases is starting to slow.
Here are a few reasons premiums have been rising:
- More frequent and severe weather events
- Higher costs for repairs and rebuilding
- Increased insurance claims
That said, the average increase in premiums over the past year is smaller than it was the year before. For a lot of homeowners, it could be a good time to look for ways to bring those costs back down.
What To Consider Before You Raise Your Deductible
Paying less per year is appealing, but there is a trade-off: if something goes wrong, you will be on the hook for more of the cost up front. So, before you make the change, ask yourself these questions:
- Could you comfortably cover a $2,000 deductible? If a major issue happened, like a burst pipe or storm damage, would that out-of-pocket cost be manageable?
- Does your emergency fund have enough cushion? If not, a higher deductible could turn into financial stress, even with lower monthly payments.
If you are not sure you could cover the higher amount, a middle-ground option might be better. For example, moving from $500 to $1,000 could still give you savings without too much risk.
Other Ways To Lower Your Premium
While raising your deductible is one of the most effective ways to save, it is not the only option. Consider these strategies too:
- Ask your insurance agent what your deductible change would save you. That way, you can compare the savings to the added risk and decide if it is worth it.
- Bundle your home and auto insurance. Many insurers offer a discount if you keep both policies with them.
- Consider home improvements that reduce risk. Installing storm shutters, upgrading your roof, or adding a security system could lower your premium over time.
For more ways to make your home more resilient, check out resources from the Insurance Institute for Business & Home Safety and the U.S. Department of Energy. And if you live in an area prone to flooding, FEMA has helpful information on protecting your home as well.
Bottom Line
With premiums rising, it is smart to explore all of your options. Raising your deductible could save you hundreds each year. Just be sure you can cover the extra cost if a claim comes up.
If you are also thinking about buying or selling a home, or simply want to talk through how these costs fit into your bigger picture, reach out. I am here to help you think through the next step.