Policy Deductible Increases: The Safer Way to Save Premium Dollars
Money is still tight for many families in Ohio, meaning most are still looking to save when and where they can. Some of our clients have turned to the their insurance policies as a place to cut costs. Insurance can be expensive, but consumers need to carefully ask themselves where and how they can really save money in this area without jeopardizing the protections offered by their coverages.
Two typical places that many of our clients think they can cut the cost of their premiums are from reducing the dwelling/liability limits on their homeowner’s policy and reducing the liability limits on their auto insurance policy.
In reality, cutting the liability limits on these policies leaves you highly vulnerable to risk and will not ultimately save you any money over the long run. While you might save a few dollars now with such tactics, it really isn’t worth it when you stop to think about just how much you could lose if you were sued after someone was injured in your home.
Some of our clients request just to carry the state minimum on their auto liability. This is a horrible idea! The state minimum in Ohio for bodily injury is $12,500 per person, $25,000 per accident and property damage is only $7,500. Let’s face it, if you hit and injure someone these limits may only cover one or two days in the hospital for them.
If you want to decrease your premiums, a much more prudent way to do it is by increasing the deductibles on your auto and/or home policies. A deductible increase from $500 to $1000 could save you up to 15% on your homeowner’s insurance premiums. You can save 30% or more on your collision premiums by raising the deductible on your auto insurance policy to $500 or $1000 dollars.
Some consumers get nervous about not having an extra $500 to cover their newly raised deductible should they need to file a claim. Since the situation doesn’t involve thousands of dollars in difference, it’s likely to be just as difficult for most people to come up with $500 as it would be $250. The only difference will be that the extra premium savings can be saved and set aside to cover the higher deductible from any future claims. In most cases, the additional $250 could be saved in less than 24 months.
Unlike lowering limits, deductible raises can save you money without placing you at a greater financial risk. The idea here is to protect yourself against large losses that can ruin you financially as opposed to protecting yourself against a small loss.