[et_pb_section fb_built="1" _builder_version="4.0.9"][et_pb_row _builder_version="4.0.9"][et_pb_column type="4_4" _builder_version="4.0.9"][et_pb_text _builder_version="4.0.9"]<h1 id="article-heading_2-0" class="comp article-heading mntl-block" style="text-align: center;"><strong><span id="article-heading__highlight_2-0" class="comp article-heading__highlight mntl-text-block">Should You Increase Your Insurance Deductible to Save Money?</span></strong></h1>[/et_pb_text][/et_pb_column][/et_pb_row][et_pb_row _builder_version="4.0.9"][et_pb_column type="4_4" _builder_version="4.0.9"][et_pb_text _builder_version="4.0.9"]<div align="center" style="text-align: justify;">
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<p>R<span style="color: #000000;">aising your deductible will save some money on your insurance costs, however, the amount of money you save may not be what you think. Your insurance deductible will directly affect how much you get paid in a claim, but you can save thousands of dollars if you increase your deductible using the right strategy.</span></p>
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<p><span style="color: #000000;">Here is everything you need to know to figure out if choosing a higher deductible will save you money.</span></p>
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<h2 id="mntl-sc-block_1-0-4" class="comp mntl-sc-block mntl-sc-block-heading"><span class="mntl-sc-block-heading__text" style="color: #000000;">Should You Increase Your Deductible?</span></h2>
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<p><span style="color: #000000;">If you have the money on hand and are willing to pay for damages resulting from a claim, then you can increase your deductible to save on costs. If you can afford it, then take the savings your insurance company will give you and start saving money now. However, you don't want to make the mistake of increasing your deductible to save a few dollars a month before considering the long-term implications. </span></p>
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<p><span style="color: #000000;">That's the short and simple answer, but it may not be enough information to give everyone a conclusive answer on what they should do. This in-depth overview should help you understand the impact of increasing your deductible, including the ways it can save you money (or cost you money) in the short-term and long-term.</span></p>
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<h2 id="mntl-sc-block_1-0-9" class="comp mntl-sc-block mntl-sc-block-heading"><span class="mntl-sc-block-heading__text" style="color: #000000;">Where to Find Your Deductible Information</span></h2>
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<p><span style="color: #000000;">To start with the basics about insurance deductibles, you first need to know how much your deductible is currently. You will be able to find this information on the declaration page of your insurance policy. Sometimes, different coverages have different deductibles. Your earthquake coverage may be different from your water damage or flood insurance, for instance.</span></p>
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<p><span style="color: #000000;">Don't forget to explore the opportunities to save money from the different deductibles on endorsements or other areas of your policy as well.</span></p>
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<h2 id="mntl-sc-block_1-0-13" class="comp mntl-sc-block mntl-sc-block-heading"><span class="mntl-sc-block-heading__text" style="color: #000000;">What You Need to Think About Before Increasing Your Deductible</span></h2>
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<p><span style="color: #000000;">The toughest thing about insurance is that the less money you have, the more important it is to have insurance to protect you if something goes wrong. If you are struggling to come up with the money to pay for your insurance, you may want to think twice about increasing your deductible. Here are three things to consider.</span></p>
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<p><span style="color: #000000;">An increased deductible provides a percentage discount off the cost of the insurance. If you only spend $300 on your insurance, you would need a significant percentage discount to see real savings—especially compared to the cost of making a high-deductible claim.</span></p>
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<p><span style="color: #000000;">For example, do you really want to pay a $1,000 deductible in a claim to save $30 a year? What about if you save $100 in a year? You need to do the math to see if the savings make sense. The higher your insurance costs, the more you will save by increasing the deductible.</span></p>
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<h3 id="mntl-sc-block_1-0-21" class="comp mntl-sc-block mntl-sc-block-subheading"><span style="color: #000000;"><span class="mntl-sc-block-subheading__text">Why You Have Insurance</span> </span></h3>
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<p><span style="color: #000000;">If you are in a stable financial position and would likely take care of small issues yourself (without making a claim), it can make sense to get a higher deductible. If, for instance, you would never make a claim for under $1,000 on your car because you can afford to pay for it yourself, then a higher deductible of $1,000 makes a lot of financial sense.</span></p>
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<p><span style="color: #000000;">On the other hand, if you are worried about your ability to cover any amount of unexpected costs, then you're better off paying a few more dollars in insurance every year to get a deductible you could afford. Once you start to build some savings, you can revisit the issue and look into increasing your deductible. </span></p>
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<h3 id="mntl-sc-block_1-0-26" class="comp mntl-sc-block mntl-sc-block-subheading"><span class="mntl-sc-block-subheading__text" style="color: #000000;">How Often You Make Insurance Claims</span></h3>
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<p><span style="color: #000000;">If you think you will never have to make an insurance claim, you can take a risk by increasing your deductible. "Risk" is the keyword here. You may have never made a claim in your life, but you never know when you'll need to. Remember that the deductible represents the direct financial impact you are willing to personally accept if you need to make a claim. </span></p>
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<p><span style="color: #000000;">If you have a history of making too many insurance claims, there is a good chance you are already paying a lot of money for insurance. Making more claims when it is not necessary will increase your overall insurance costs. Therefore, taking a higher deductible to avoid making smaller claims may pay off. You should always negotiate with the insurance company when you are paying high premiums to see how you can find a better price. </span></p>
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<p><span style="color: #000000;">If you never make insurance claims and you can afford a higher deductible, then you should consider increasing your deductible. Every year you avoid making a claim, extra money from the higher deductible plan will be in your pocket instead of the insurance company's.</span></p>
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<p><span style="color: #000000;">For example, say you take a higher deductible of $1000 to save $100 on your annual insurance costs. After five years, you haven't made a claim, and you've saved $500. In addition, five years without claims could also make you eligible for a claims-free discount, saving you even more money on your insurance costs.</span></p>
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<p><span style="color: #000000;">The reason higher deductibles work better for some than others has to do with individual risks and financial capability. For example, many high-value home insurers have clients with $2,500 to $10,000 deductibles. These deductibles may be high for the average homeowner, but they make a lot of sense for higher valued homes and the relatively wealthier people that own them.</span></p>
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<h2 id="mntl-sc-block_1-0-36" class="comp mntl-sc-block mntl-sc-block-heading"><span class="mntl-sc-block-heading__text" style="color: #000000;">How Much Can Raising the Deductible Lower Your Insurance Costs?</span></h2>
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<p><span style="color: #000000;">You're looking to reduce the cost of home insurance, condo insurance, or car insurance, but just how much will a higher deductible impact your insurance costs? </span></p>
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<div id="google_ads_iframe_/479/thebalance/bal_other-insurance-topics/billboard7_0__container__"><span style="font-size: 26px; color: #000000; text-align: left;"><br />What's the Discount for Increasing Your Deductible?</span></div>
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<p><span style="color: #000000;">Depending on how high you increase the deductible, you could expect to save roughly 5% to 10% on your premiums. The more you increase your deductible, the higher the percentage discount becomes.</span></p>
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<p><span style="color: #000000;">As an example, you can expect to save between 15% and 30% on your car's collision and comprehensive coverage by increasing your deductible from $200 to $500.<span class="mntl-inline-citation mntl-dynamic-tooltip--trigger" data-id="#citation-2">2</span> If you go up to $1,000, you could potentially save 40%<strong>.</strong></span></p>
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<p><span style="color: #000000;">The same logic applies to home insurance. Depending on your insurance company, increasing your deductible from $500 to $1,000 could reduce your insurance costs by up to 25%.<span class="mntl-inline-citation mntl-dynamic-tooltip--trigger" data-id="#citation-3">3</span> Over time, you might save thousands by strategically increasing your insurance deductibles and avoiding small claims.</span></p>
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<h2 id="mntl-sc-block_1-0-46" class="comp mntl-sc-block mntl-sc-block-heading"><span class="mntl-sc-block-heading__text" style="color: #000000;">How Much You Can Afford to Increase Your Deductible?</span></h2>
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<p><span style="color: #000000;">Increasing your deductible is just one way to save money on home insurance, car insurance, or any other type of insurance. It's a popular option for people looking to save because it's the easiest to do <em>right now.</em> However, while you will immediately save money on your premium, increasing your deductible may cost you money in the long-term, if you can't afford to make a claim.</span></p>
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<p><span style="color: #000000;">If you have set aside an emergency fund specifically for car accidents or similar events, then that makes it easy—the deductible you can afford is the amount of your emergency fund. However, if you have a mixed savings account that includes car accident funds alongside other emergency funds, then it may be more difficult to separate out how much you could afford to pay as a deductible.</span></p>
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<p><span style="color: #000000;">When you insure your home and car through the same insurer, you may be able to pay a single deductible for a claim that affects both. This can save you money.</span></p>
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<h2 id="mntl-sc-block_1-0-52" class="comp mntl-sc-block mntl-sc-block-heading"><span class="mntl-sc-block-heading__text" style="color: #000000;">Example of High Deductible Savings Gone Wrong</span></h2>
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<p><span style="color: #000000;">As an example of how high deductibles can end up costing you more money in the long run, consider this example.</span></p>
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<p><span style="color: #000000;">You take a higher deductible of $1,000 and save $100 a year on your insurance costs. You're happy because you see it as saving $100 a year. After five years, you haven't made a claim, and you've saved a total of $500.</span></p>
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<p><span style="color: #000000;">Then, in the sixth year, you have to make a claim. You've saved $500, but that's only half of the $1,000 deductible you now have to come up with. Not only are you in the middle of a stressful insurance claim, but you're worried about how you'll afford to pay the deductible. You might have been better off paying more for the lower deductible plan.</span></p>
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<h2 id="mntl-sc-block_1-0-59" class="comp mntl-sc-block mntl-sc-block-heading"><span class="mntl-sc-block-heading__text" style="color: #000000;">Other Ways to Save Money on Your Insurance</span></h2>
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<p><span style="color: #000000;">If you are still looking for ways to save money on your home insurance, you may want to check out your home insurance coverage options and see if you have the right policy for your needs. Insurance companies actively compete for customers, so it might pay to shop around for your insurance or negotiate with your car insurance or home insurance company.</span></p>
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<h2 id="mntl-sc-block_1-0-62" class="comp mntl-sc-block mntl-sc-block-heading"><span class="mntl-sc-block-heading__text" style="color: #000000;">Your Insurance Policy Should Change With Your Needs</span></h2>
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<p><span style="color: #000000;"> <span style="font-size: 14px;">An insurance company that was well suited to your needs five years ago may not be the best company to insure you now.</span></span></p>
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<p><span style="color: #000000;"> <span style="font-size: 14px;">Sometimes it's worth </span>paying a penalty for canceling<span style="font-size: 14px;"> </span><span style="font-size: 14px;">with one insurance company to get a better insurance deal with a new one. You may only need to call your insurance company and tell them you're ready to shop around—they may come up with some new ideas on how to save money so they don't lose you as a customer.</span></span></p>
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<h2 id="mntl-sc-block_1-0-67" class="comp mntl-sc-block mntl-sc-block-heading"><span class="mntl-sc-block-heading__text" style="color: #000000;">Learn About Your Deductible Waivers</span></h2>
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<p><span style="color: #000000;">The deductible waiver on a home insurance or condo insurance policy is a clause that waives the deductible in the event of a large loss.<span style="font-size: 14px;"> </span></span></p>
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<p><span style="color: #000000;">Every insurance company will take a different approach to whether they offer a deductible waiver, and it may not be easy to tell how it applies to you. Even if your plan includes waivers, it may have been tucked away in some densely worded part of your insurance policy. Better understanding when the deductible waiver will apply may allow you to comfortably sign up for a higher deductible plan. The best way to clear it up is to directly ask your insurance representative if there is a deductible waiver in your insurance policy, and if so, when it kicks in.</span></p>
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<p><span style="color: #000000;"> <span style="font-size: 14px;">For example, some policies might have a deductible waiver for losses of over $10,000. Other policies may have a very high threshold before deductible waivers kick in, like</span><span style="font-size: 14px;"> </span>major claims<span style="font-size: 14px;"> </span><span style="font-size: 14px;">or losses over $50,000. If you're only insuring yourself for a major loss like a fire, it could make sense to take full advantage of these waivers by seeking a higher deductible.</span></span></p>
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<h2 id="mntl-sc-block_1-0-74" class="comp mntl-sc-block mntl-sc-block-heading"><span style="color: #000000;"><span class="mntl-sc-block-heading__text">Deductible Waivers on Car Insurance</span> </span></h2>
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<p><span style="color: #000000;">Car insurance policies sell deductible waivers, as well. However, unlike with home insurance plans, deductible waivers generally increase the cost of car insurance. While deductible waivers are nice, you've got to ensure that it doesn't come with extra costs that outweigh the benefits.</span></p>
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<h2 id="mntl-sc-block_1-0-77" class="comp mntl-sc-block mntl-sc-block-heading"><span class="mntl-sc-block-heading__text" style="color: #000000;">Use Your Increased Deductible to Save Money</span></h2>
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<p><span style="color: #000000;">If you decide you can afford to increase your deductible and save 10% or 40% on insurance, consider putting the savings on insurance costs into an emergency fund bank account. As your savings grow, you can increase your deductible accordingly, and then save even more on insurance.</span></p>
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<p><span style="color: #000000;">If you never have to make a claim and pay that higher deductible, then all that extra money stays in your pocket. On the other hand, if you end up needing to pay your deductible, you've got the money ready. It's a win-win for you.</span></p>
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<h2 id="mntl-sc-block_1-0-81" class="comp mntl-sc-block mntl-sc-block-heading"><span class="mntl-sc-block-heading__text" style="color: #000000;">The Bottom Line</span></h2>
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<p><span style="color: #000000;">You can save hundreds (if not thousands) of dollars on your insurance by developing a strategy that balances your financial situation with deductible amounts. Ask your insurance representative to assess your insurance choices and recommend some options to save money. </span></p>
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<p>To read the full article, <a href="https://www.thebalance.com/how-to-use-your-insurance-deductible-to-save-money-4075986" style="font-size: 14px; text-align: left;">click here</a><span style="font-size: 14px; text-align: left;">.</span></p>
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